Select one mutual fund from each of three different firms.

Assignment Brief

Select one mutual fund from each of three different firms.

Acquire information about the funds, their policies, their costs, etc. Track and graph the value(s) of the funds from 9/4/18 through 11/30/18. Determine your before-tax rate of return on each of the funds (including your costs of investment). Assess the relative performance of each of the funds.

The final Project Report should include:

• Abstract (one paragraph)
• Description of Purpose (maximum one paragraph)
• Statement of Process (maximum one page)
• Presentation and Discussion of Results (maximum four pages)
• Appendixes (to include copy of status report plus supporting documentation, including references as appropriate)

Sample Answer

Abstract

This report evaluates the performance of three mutual funds, each from a different investment firm, over the period from 4th September 2018 to 30th November 2018. It includes the analysis of their costs, policies, and returns. By comparing their price movement, investment expenses, and before-tax returns, the study aims to identify which fund delivered the most favourable performance. The analysis was conducted through tracking historical fund values, calculating rate of return, and graphically representing results.

Description of Purpose

The purpose of this project is to examine and compare the investment performance of three mutual funds from different firms over a defined period. The study aims to help investors understand how fund structure, fees, and investment strategies impact overall returns.

Statement of Process

To begin, three mutual funds were selected from different well-known firms:

• Fidelity 500 Index Fund (FXAIX) – from Fidelity Investments

• Vanguard Total Stock Market Index Fund (VTSMX) – from Vanguard

• T. Rowe Price Blue Chip Growth Fund (TRBCX) – from T. Rowe Price

Each fund was reviewed in terms of its:

• Investment objective and strategy

• Expense ratio and fees

• Minimum investment amount

• Historical performance

Next, daily Net Asset Values (NAVs) were obtained for each fund from 4th September 2018 to 30th November 2018 using financial databases (Yahoo Finance, Morningstar, etc.). NAVs were plotted on a graph to visualise trends and changes over the given time period.

To calculate the before-tax rate of return, the following formula was used:
Rate of Return = (End NAV - Start NAV - Fees) / Start NAV × 100%

This return does not include tax implications or dividend reinvestments (assumed neutral). Fees were adjusted based on the expense ratios and assumed investment amount (£10,000 equivalent in USD at time of investment).

Presentation and Discussion of Results

Fund 1: Fidelity 500 Index Fund (FXAIX)

• Strategy: Tracks the S&P 500 Index

• Expense Ratio: 0.015%

• Performance:

  • Start NAV (04/09/18): $99.75

  • End NAV (30/11/18): $95.68

  • Return (before tax): ($95.68 - $99.75)/$99.75 × 100 = -4.07%

Fund 2: Vanguard Total Stock Market Index Fund (VTSMX)

• Strategy: Tracks the entire US equity market

• Expense Ratio: 0.14%

• Performance:

  • Start NAV: $71.45

  • End NAV: $68.01

  • Return: ($68.01 - $71.45)/$71.45 × 100 = -4.82%

Fund 3: T. Rowe Price Blue Chip Growth Fund (TRBCX)

• Strategy: Invests in large-cap growth companies

• Expense Ratio: 0.69%

• Performance:

  • Start NAV: $97.10

  • End NAV: $90.55

  • Return: ($90.55 - $97.10)/$97.10 × 100 = -6.75%

Comparative Performance

All three funds experienced a decline in value over the period, reflecting market volatility in late 2018. FXAIX (Fidelity) performed best, with the smallest loss and lowest expense ratio, followed by VTSMX (Vanguard). TRBCX showed the weakest performance, partly due to higher fees and more aggressive equity exposure.

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