Selecting Mutual Funds for Retirement Accounts (A)

2018 ◽  
pp. 1-17
Author(s):  
Phillip A. Braun
Keyword(s):  
Mutual Funds ◽  
Mutual Fund ◽  
First Year ◽  
Retirement Savings ◽  
Defined Contribution ◽  
Management Turnover ◽  
Risk Return ◽  
Retirement Plan ◽  
Retirement Accounts ◽  
Northwestern University

Alice Monroe, a 30-year-old married mother of two, was an admissions officer at the Kellogg School of Management at Northwestern University. She was just completing her first year of service at Northwestern and qualified for the university's 403(b) retirement plan. It was early October 2017, and she had until the end of the month to decide if and to what extent she would participate in Northwestern's retirement plan–that is, how much of her salary should she put into the retirement plan, and into which mutual fund or funds should she allocate her savings? The case includes background on defined contribution and benefit plans as well as mutual funds. It goes into detail about Northwestern's retirement plan, including data on the performance of 15 of the plan's core mutual funds. The case also provides each fund's strategy, Morningstar Rating and Morningstar Category, expense ratio, assets under management, turnover rate, and historical performance for the last 10 years. Using modern portfolio theory (diversification and risk-return trade-off) and with an understanding of mutual fund fees and the tax advantages of retirement savings, students will decide how much Alice should invest and in which mutual funds.

Selecting Mutual Funds for Retirement Accounts (B)

2018 ◽  
pp. 1-16
Author(s):  
Phillip A. Braun
Keyword(s):  
Mutual Funds ◽  
Optimal Allocation ◽  
Portfolio Theory ◽  
Equity Fund ◽  
Expected Return ◽  
Modern Portfolio Theory ◽  
Related Case ◽  
Retirement Plan ◽  
Retirement Accounts ◽  
Northwestern University

Alice Monroe was an admissions officer at the Kellogg School of Management at Northwestern University. It was early January 2017 and Alice had enrolled in Northwestern's 403(b) retirement plan two months earlier. After spending a considerable amount of time examining the mutual funds available through the university's retirement plan, Alice had picked two to invest in: a large-cap equity growth fund and a mid-cap equity fund. (See the related case "Selecting Mutual Funds for Retirement Accounts (A).") Her initial allocations were 50% of her investment dollars in each fund. Upon further reflection, however, she realized these initial allocations were somewhat simplistic. She recalled, from an investments class she had taken at college, the topic of modern portfolio theory, which held that by adding more funds to her portfolio she might be able to achieve greater diversification and thereby reduce the overall risk of her portfolio and/or achieve a higher expected return. Alice now was considering adding an intermediate-term bond fund and a real estate fund to her retirement account. She hoped to use modern portfolio theory to prove that these new funds would indeed help her diversify her portfolio. If they did, she would also reassess her portfolio weights to determine the optimal allocation.

An Empirical Study on the Performance of Select Large Cap Equity Mutual Funds in India

2015 ◽  
Vol 2 (1) ◽  
Author(s):  
Samyabrata Das
Keyword(s):  
Mutual Funds ◽  
Asset Management ◽  
Mutual Fund ◽  
Human Element ◽  
Risk Return ◽  
Equity Mutual Funds ◽  
Equity Funds ◽  
Managed Funds ◽  
Opening Up ◽  
Fund Return

Since the opening up of the economy in the early 1990s, Indian mutual fund industry has witnessed fabulous quantitative growth. Funds which invest a larger proportion of their corpus in companies with large market capitalization are called large cap funds. Actively managed funds make use of a human element, such as a single manager, comanagers or a team of managers, to actively manage a fund's portfolio. The main objective of the study is to analyse the performance of select actively managed large cap equity funds in the line of risk-return parameters. This study is based on fourteen funds from twelve Asset Management Companies. All the funds are ranked under seven performance measures, namely, fund return, fund standard deviation, Sharpe Ratio, Treynor Ratio, return from systematic investment plan (SIP), Jensen Alpha, and RSQ, for five different time periods of 1-year, 3-year, 5-year, 7-year, and 10-year.

scholarly journals A STUDY ON RISK & RETURN ANALYSIS OF SELECTED SECURITIES IN INDIA

2020 ◽  
Vol 5 (4) ◽  
pp. 79-86
Author(s):  
P. Subramanyam ◽  
Nalla Kalyan
Keyword(s):  
Mutual Funds ◽  
Risk Taking ◽  
Capital Market ◽  
Mutual Fund ◽  
Policy Reforms ◽  
Important Place ◽  
Risk Return ◽  
Interesting Insight ◽  
Small Investors ◽  
Insight Into

The main objective of the study is to give investors a basic idea of investing into the mutual funds and encourage them to invest in those areas where they can maximize the return on their capital. The research provided an interesting insight into awareness about the mutual funds, risk taking abilities of investors and investment options preferred etc. The Indian Capital has been increasing tremendously during the last few years. With reforms of economy, reforms of investing policy, reforms of public sector and reforms of financial sector, the economy has been opened up and many developments have been taking place in the Indian money market and Capital market. In order to help the small investors, mutual fund industry has come to occupy an important place. This study helps us to understand how the companies diversify themselves in different sectors and in different companies to maximize the returns and to minimize the risks involved in it.

scholarly journals Use of Advisors and Retirement Plan Performance

2020 ◽  
Vol 31 (2) ◽  
pp. 342-356
Author(s):  
Rui Yao ◽  
Weipeng Wu ◽  
Cody Mendenhall
Keyword(s):  
Portfolio Allocation ◽  
Objective Measures ◽  
Retirement Savings ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Retirement Plans ◽  
Cross Sectional ◽  
Retirement Plan ◽  
Research Gap

As defined contribution (DC) plans become more popular than defined benefit (DB) plans, American workers are increasingly responsible for their retirement savings. Because retirement plan participants' portfolio allocation is constrained by the available funds in the plan, the construction of a plan's investment menu has become extremely important. No research has evaluated fund selection in retirement plans or compared plans involving an advisor with self-directed plans. To fill this research gap, this study employs cross-sectional, nationwide data that include 5,570 retirement plans with 100 or more participants in 2013, 2014 and 2015. Results show that in most cases, using advisors is not related to plan performance. Plan sponsors should require advisors to periodically evaluate the performance of plans under their management using objective measures.

scholarly journals Manager-Investor Conflicts in Mutual Funds

2004 ◽  
Vol 18 (2) ◽  
pp. 161-182 ◽  
Author(s):  
Paul G Mahoney
Keyword(s):  
Mutual Funds ◽  
Mutual Fund ◽  
Conflicts Of Interest ◽  
Cash Flows ◽  
Third Parties ◽  
Mutual Fund Managers ◽  
Legal Proceedings ◽  
Fund Managers ◽  
Retirement Accounts ◽  
Regulatory Proposals

Half of all of U.S. households own shares in one or more mutual funds, either directly or through personal or employer-sponsored retirement accounts. This article describes the structure and regulation of mutual funds and the resulting incentives facing those who make decisions for the funds. After providing some basic institutional details, it focuses on the cash flows from mutual fund investors to fund managers, brokers, and other third parties and the associated conflicts of interest. The article concludes with a summary of recent legal proceedings against mutual fund managers and brokers based on improper trading practices and regulatory proposals to curb those practices.

A Study on Factors Influencing Mutual Fund Portfolio Performance

2018 ◽  
Vol 5 (2) ◽  
pp. 1-11
Author(s):  
Medhanie Mekonnen ◽  
Roger Mayer ◽  
Wen-Wen Chien
Keyword(s):  
Mutual Funds ◽  
Mutual Fund ◽  
Portfolio Performance ◽  
Management Turnover ◽  
Performance Expectations ◽  
Equity Mutual Funds ◽  
Portfolio Managers ◽  
Fund Portfolio ◽  
The Relationship ◽  
Annual Fund

Mutual fund portfolio managers do not always meet performance expectations, resulting in loss of capital reserves. Out of 3,612 U.S. based open-ended mutual funds, the risk-adjusted performance of 2,890 (80%) failed to meet the S&P 500 performance between the year 2006 to 2016. Grounded in Markowitz's modern portfolio theory, this correlational study examined the relationship between mutual fund class type, portfolio turnover, fund longevity, management turnover, and annual fund risk-adjusted performance. Archival data were collected from 88 U.S. based equity mutual funds companies. The results of the multiple regression analysis indicated the model as a whole was able to significantly predict annual fund risk-adjusted performance for the 5-year period ending 2016, F (4, 83) = 3.581, p = .010, R2 = .147. In the final model, mutual fund class type and portfolio turnover were statistically significant with mutual fund class type (ß= .249, t = 2.302, p = .024) accounting for a higher contribution to the model than portfolio turnover (ß = .238, t = 2.312, p = .023).

scholarly journals A Research on Risk Return Analysis of Selected Growth Option Mutual Fund Schemes in India

2019 ◽  
Vol 8 (12S) ◽  
pp. 545-551
Keyword(s):  
Mutual Funds ◽  
Asset Management ◽  
Mutual Fund ◽  
Research Study ◽  
Secondary Data ◽  
Risk Return ◽  
Growth Option ◽  
Equity Mutual Funds ◽  
Public Risk ◽  
Basic Features

Mutual funds are one of the best intermediaries in capital markets to mobilize funds from general public. Risk and return are the basic features of mutual fund. The present study evaluates and compares the performance of 26 large-cap equity schemes of five Asset Management Companies (Franklin Mutual Fund, India bulls Mutual Fund, UTI Mutual Fund, SBI Mutual fund, Axis Mutual fund). The period of the study is 5 years from 2013 to 2018. Benchmark index is BSE 100 index has been collected from www.bseindia.com. The research study has analyzed the performance of Large-Cap Equity Mutual Funds of Select Asset Management Companies and to compare the performance of Large-Cap Equity Mutual Funds of Select Asset management Companies. The methodology of the present study includes sampling, data collection and data analysis tools used for the study. The present research study is based on purely secondary data. The NAV data has been obtained from Association of Mutual funds of India (AMFI) website and other secondary data obtained from books, journals and respective mutual fund websites. In this research study, financial tools Sharpe Index, Treynor’s Index and Jensen Alpha etc., are applied for processing the data to give reliable conclusion.

scholarly journals Defined Contribution Pension Plans: Mutual Fund Asset Allocation Changes

2015 ◽  
Vol 105 (5) ◽  
pp. 432-436 ◽  
Author(s):  
Clemens Sialm ◽  
Laura Starks ◽  
Hanjiang Zhang
Keyword(s):  
Mutual Funds ◽  
Asset Allocation ◽  
Mutual Fund ◽  
Pension Plans ◽  
Defined Contribution ◽  
Fixed Income ◽  
Macroeconomic Conditions ◽  
Fund Managers ◽  
Defined Contribution Plans ◽  
Asset Allocations

In this paper we compare changes in asset allocations between mutual funds held in defined contribution pension plans and funds held by other investors. We investigate how flows into equity and fixed income mutual funds depend on macroeconomic conditions. We find that defined contribution plans react more sensitively to these conditions, suggesting effects on mutual fund managers and other investors.

scholarly journals Risk, return & performance evaluation of selected mutual fund schemes – a study on large & mid cap funds

2012 ◽  
Vol 1 (4) ◽  
pp. 348-362
Author(s):  
Krunal K Bhuva ◽  
Ashok R. Bantwa
Keyword(s):  
Mutual Funds ◽  
Mutual Fund ◽  
Academic Research ◽  
Fund Performance ◽  
Stock Selection ◽  
Market Returns ◽  
Fund Managers ◽  
Risk Return ◽  
Long Run ◽  
Better Than

This paper studies the persistence of mutual fund performance. Academic research oftenfocuses on fund returns. This study intends to examine the performance of selected Large cap and Mid capmutual fund schemes of Indian Mutual fund industry during the study period 2007 to 2011. The performanceof selected schemes is evaluated in terms of average returns, systematic risk, and unsystematic risk and byusing different measures like: Sharpe, Jenson, Treynor and FAMA. After detailed analysis it is found thatexcept two all the sampled schemes have performed better than market. Supporting the establishedrelationship of high risk - high return, better performing schemes are exposed to higher risk. The findings alsorevealed that majority of the schemes were adequately diversified and about 60% of the schemes were able tobeat the market with help of better stock selection skill of fund managers. Finding from the t-test calculationsshows that there is no difference between returns from large cap mid cap mutual funds in long run. From thereturn comparison of mutual funds and market, in 2008 & 2011 large cap are underperforming than marketand in 2011 only mid cap mutual funds are showing less return than market returns.

Mutual fund efficiency and tradeoffs in the production of risk and return

2016 ◽  
Vol 42 (3) ◽  
pp. 225-243 ◽  
Author(s):  
Michael Devaney ◽  
Thibaut Morillon ◽  
William Weber
Keyword(s):  
Transaction Costs ◽  
Mutual Funds ◽  
Capital Market ◽  
Mutual Fund ◽  
Efficient Frontier ◽  
Fund Performance ◽  
Mutual Fund Performance ◽  
Risk And Return ◽  
Content Type ◽  
Risk Return

Purpose – The purpose of this paper is to estimate the performance of 188 mutual funds relative to the risk/return frontier accounting for the transaction costs of producing a portfolio of investments. Design/methodology/approach – The directional output distance function is used to estimate mutual fund performance. The method allows the data to define a frontier of return and risk accounting for the transaction costs associated with securities management and production of risky returns. Proxies for the transaction costs of producing a portfolio of securities include the turnover ratio, load, expense ratio, and net asset value. The estimates of mutual fund performance are bootstrapped to account for the unknown data generating process. By comparing each mutual fund’s performance relative to the capital market line the authors determine how the fund should adjust their portfolio in regard to risk and return in order to maximize the inefficiency adjusted Sharpe ratio. Findings – The bootstrapped estimates indicate that the average mutual fund could simultaneously expand return and contract risk by 3.2 percent if it were to operate on the efficient frontier. After projecting each mutual fund’s return and risk to the efficient frontier the authors find that a majority of the mutual funds should reduce risk to be consistent with the capital market line. Originality/value – Many researchers have used data envelopment analysis to estimate a piecewise linear frontier of risk and return to measure mutual fund performance. To the authors’ knowledge the research is the first to use a twice-differentiable quadratic directional distance function to measure the managerial performance and risk/return tradeoff of mutual funds.

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