Mutual Fund Evaluation


MutualFund Evaluation

Activelymanaged common stock fund

Activelymanaged common stocks refer to an investment option where managersidentify stocks or other financial securities with specificobjectives, such as reaching a given index. Also, they aim to achieveparticular level of profit while bearing defined risk level. Vanguardis an example of such mutual funds. The cost of managing theinvestments is higher, compared to the passive stock, becausestock-picking is continuous. Consequently, they have higher taxes andexpense ratio. The venture targets individual investors,institutional depositors, and partakers of retirement plans that aresponsored by the employers as well as financial advisors. Besides,anyone looking for a long term investment option that generatesprofit is best suited by the venture. The managers handpick stocksfrom established organizations, and that have high potential to gainhigh dividend in the future (Actively-Managed Funds Definition, n.d).

Theprimary drawback with the investments is that no government agency or Federal Deposit Insurance Corporation insures the deposit. As such,the depositor can lose the deposit if the market becomes unfavorable.Fortunately, Vanguard market fund preserves the investment at thecost of a dollar per share (Vanguard, n.d).

Fixedincome fund

Theventure offers an opportunity to guard the deposits from marketinstability. Besides, it helps in the generation of present incomeand diversification of portfolio. AMP capital specializes in theprovision of such investment option (AMP Capital, 2015). Theborrower takes the deposited cash from the investor, and is in returnexpected to repay the owners specific interest on the amountdeposited annually. The financial plan is mostly used by the oldretirees who depend on the investment returns to offer constantincome. On the contrary, AMP generates profit because it targetsinvestment options that will generate higher returns than theinvestors’ payouts (AMP Capital, 2015). The managers adopt anindependent and active valuation strategy. The approach helps toidentify ventures that will generate higher profit that the setincome markets that result from trending tendencies (Fabozzi &ampFabozzi, 2007).


Thisinvestment targets individuals in search of combined income, safetyas well as modest resources appreciation. The capital each investorputs in every account is supposed to be balanced through maintaininga specified maximum and minimum balance. Most of the investments aremainly in form of bonds and stocks. The Wellington Fund (VWELX) andWellesley Income Fund (VWINX) are examples of balanced funds.Wellington owns 65/35 while Wellesley possesses 35/65. Balanced fundscome as either income or equity-income investment. The latter ismostly available as stocks that pay dividend. Although the investorsaim at generating income, it also targets to acquire capital gain. In other words, capital growth is crucial to the depositors thansustained capital and income safeguarding. Balanced funds are relatedto bond funds. Nonetheless, they have different quantities ofnon-debt options such as real estate, common stock and preferredstock.

Thesignificance of diversified balanced funds gives several options toentrepreneurs. Practically, the instruments are highly volatiletherefore, they are only suitable for long-term investors (more thana year).


Thisis an investment option that target entrepreneurs from places outsidethe physical location of a certain organization. A suitable exampleof such an instrument is the International Monetary Fund (IMF). Itsobjective is provision of investment knowledge to the membercountries as well as financial support. In the recent past, the fundhas become indispensable to the developing nations. The money isallocated to various countries for economic stimulation. It ismanaged by the United Nations Organizations, and its objective isaverting recurrence of situations such as the Great Depression. Theinvestment funds are contributed by its186 founder members. Presently, it is the leading lender in the world. However, it lendsto countries instead of individuals (Fiscal Issues at the IMF, n.d). One of the objectives of the founder of the fund was to facilitate abalanced international trade as it promises to deliver an efficientforeign exchange mechanism. The member states subscribe to contributea given quota to the fund. The quota each country providesinfluences its voting power as well as the amount it can borrow fromthe said account (Fiscal Issues at the IMF, n.d).

Funddevoted to retirement investing

Thefund combines cash, stocks and bonds for the senior citizens who arealready retired, or planning to retire soon. The main objective ofthe investments is creation of constant income. T. Rowe Price is oneof the investment plans that are dedicated on provision of retirementfunds. Additional services available under the financier includefinancial intermediaries, subadvisory services and individualseparate account management (Investingduring retirement,1997). The depositors mainly target acquisition of high income aswell as guaranteed security. T. Rowe Price retirement fund providesboth alternatives. However, the investments are best suited forclients in search of long-term investments. One of the benefits ofthe investment option is that it minimizes the management cost whileincreasing the returns (Ellis &amp Vertin, 2001).


Mutualfunds refer to cash pooled from diverse depositors for investmentpurposes. The options are diversified to suit individualentrepreneurs. For example, the retirement mutual funds are long-terminvestments that aim at creating a steady flow of income for thesenior citizens. Conversely, the fixed funds and common stockportfolio are investment plans that target depositors with cash thatthey intend to grow at a rate that surpasses the inflation.


Actively-ManagedFunds Definition.(n.d). TheStreet, Inc. retrieved from

AMPCapital (2015). Global fixed income and cash. AMP Capital©InvestorsLimited. Retrieved from

Ellis,C. D., &amp Vertin, J. R. (2001). Theinvestor`s anthology: Original ideas from the industry`s greatestminds.New York: Wiley.

Fabozzi,F. J., &amp Fabozzi, F. J. (2007). Fixedincome analysis workbook (2nded).Hoboken, N.J: J. Wiley.

FiscalIssues at the IMF, (n.d). International Monetary Funds. Retrievedfrom

Investingduring retirement.(1997). Chicago: Irwin Professional Pub.

Vanguard.(nd)The Vanguard Group, Inc (Us). Retrieved from