Abstract In order to determine the value of indexinvestments as an investment strategy, this paper weighs several important considerations. It defines indexfunds and lists the types of indexfunds that are available to the investor. It then gives a thorough list and analysis of the major advantages and disadvantages of indexinvesting. The paper then lists the alternatives to indexinvesting and investigates the advantages and disadvantages of these alternatives. The Efficient Market Hypothesis is explained and how this might impact the evaluation of indexinvesting and the alternatives to indexinvesting. It concludes this case study by giving a personal analysis of whether the writer would include indexinvesting in his personal portfolio.
From the Paper "Simply put, an index fund is a mutual fund that attempts to match, with as much accuracy that is possible, the performance in a stock market index. Mutual funds have created S&P500 index funds in an attempt to copy the Standard and Poor (S&P)500 index, by buying all 500 stocks in the same percentage that they are present in the index.
"Interestingly, S&P 500 tracks the performance of large company stocks in the United States, like the Dow Jones Industrial Average. The S&P 500 index tracks the stock prices of 500 big companies, which account for close to 80 percent of the total market value all of the stocks that are traded in the United States. Index funds mirror the returns of a specific index, or a group of securities, that are considered measuring sticks of the behavior of the market as a whole. If the market increases 5% in one year, the index will also increase by close to 5% in the same specific time frame."
Abstract This paper outlines the main characteristics of hedge funds and looks at how these differ from traditional investmentfunds. There are over a dozen investment techniques used in hedge fund industry in order to make returns. The paper describes four of them: opportunistic, market neutral - securities hedging, global macro and value investment style. The great size of the assets under management of the hedge fund suggests that they are important clients of investment banks and can play a significant role in the financial markets. The paper also takes a closer look at how investment banks work with hedge funds and what impact the hedge funds have on the overall stability of the financial markets.
Outline:
Introduction
An Overview of Hedge Funds, Comparison to Traditional Funds and Their Importance as Clients of Investment Banks
Recent Expansion of Hedge Funds Hedge Funds and Financial Stability
Some Risks Associated With Hedge Funds Regulation of Hedge Funds Hedge Funds' Investment Styles
Conclusion
From the Paper "The definition of a hedge fund is an investment institution, which actively manages its portfolio using a large number of strategies and leverage in order to produce high returns, which are measured in absolute terms and/or over a specified benchmark, such as FTSE100 in the UK or the DOW30 in the US. Hedge funds are similar to the traditional investment funds in that they are both pooled and professionally managed, however, there is a number of differences. Unlike traditional funds HFs are practically unregulated and have the flexibility in their trading and investment strategies, e.g. go short when markets are bearish or when a manager thinks that an asset is overpriced and is due a correction (source: Investopedia)."
Abstract This paper provides an overview of mutual funds, investment vehicles that pool the money of thousands of investors to invest in a wide variety of securities with a specific objective. It discusses how mutual funds provide professional management and diversification and, because of this, are safer and less volatile than individual stocks or bonds. It examines how different classes of mutual funds have different objectives, such as growth, growth and income, income, etc. and how the mutual fund or funds that investors select reflect their objectives and tolerance for risk.
Table of contents:
Introduction
Types of Mutual Funds Mutual Fund Fees
Distributions and Their Tax Consequences
Kinds of Funds Available
My Investment Options
Conclusion
Bibliography
From the Paper "Generally, there are two types of mutual funds. The first type is called an "open-ended" fund. In an open-ended fund, the fund does not have a set number of shares. It will continue to issue shares as long as investors will buy them. Investors can also redeem shares. At the end of each trading day, the fund manager will calculate the net asset value (NAV) of the fund. The NAV is the total value of the assets held by the fund divided by the total number of fund shares. Shares are purchased or redeemed on the basis of the NAV. "
Abstract In this article, the writer explains that a mutual fund is simply a pool of money that is invested by a manager with the goal of increasing the value of each share of the fund for its investors. The writer further explains that a mutual fund provides investors with diversification of their portfolios, thereby spreading risk and providing the convenience of buying and selling shares in the fund on any business day. The writer then notes that more and more average investors are seeking out investment opportunities in mutual funds, and the research shows that such funds exist for virtually any investment goal or objective. This study then provides a critical evaluation of the mutual funds industry in general and the use of mutual funds in India in particular. A comparison of Indian investment options that evaluates domestic versus overseas investments is provided, as well as a review of typical company strategies and an analysis of the riskiness of these respective investments.
Table of Contents:
Chapter 1: Introduction
Statement of the Problem
Hypothesis
Rationale
Definition of Key Terms
Chapter 2: Literature Review
Chapter 3: Methodology
Statistical Analysis
Data Collection
Chapter 4: Data Analysis
Chapter 5: Summary, Conclusions and Recommendations
References
Appendix A
From the Paper "Venture capital activity in India was formalized in 1988 when the central government announced guidelines for the establishment and functioning of the industry. Venture capital companies sprang up, several sponsored by government development financial institutions. With significant economic liberalization policies introduced by the central government in 1991, more domestic and foreign venture capital companies began operations. In 1996, the central government introduced new and improved guidelines for regulating India's venture capital industry. In spite of this significant progress, growth of the industry has been restricted by several factors, including conservative government policies, limitations on the availability of funds, and an inadequate equity market infrastructure."
Abstract This paper describes the JICAN Fundinvestment project, explaining the overall investment strategy, the primary factors considered when formulating the investment strategy, and the approach taken to accurately assess the performance of the Fund. The paper also discusses total risk and recommendations if JICAN Fund is being considered as a sole investment or as part of a bigger portfolio of investments. Lastly, the paper discusses the key lessons learned from the project which include that diversification is crucial for successful portfolio management and that asset allocation plays the primary role in determining the portfolio return when compared to securities selection or market timing.
Table of Contents:
Executive Summary
Portfolio Investment Strategy
Investment Strategy
Strategic Asset Allocation
Systematic Security Selection and Market Timing
Risk Controls and Realization Guidelines
Sector Analysis and Execution
North American Equities
Energy
Financials
Materials
Retail
Telecom/Technology
Emerging Market Equities
Exchange Traded Funds (ETFs)
Portfolio Performance Measurements
Overview
Performance Analysis
After-thoughts and Lessons Learned
Appendix 1: Stock Selection Criteria
Appendix 2: Economic Outlook
Appendix 3: Additional Selection Criteria
Appendix 4: Performance Measurement
From the Paper "AMX is a provider of wireless telecommunications services in Latin America. As of December 31, 2007, it had 153.4 million subscribers in 17 countries which include 50 million subscribers in Mexico through Telcel. Also, AMX operates through Americel in Brazil and through Comcel in Colombia. Furthermore, it provides wireless services in Uruguay, Paraguay, Argentina and Chile. It provides fixed-line and wireless services in Guatemala, El Salvador and Nicaragua. We believe that AMX's domination of the Mexican wireless telecom market and other markets such as the Brazilian's and Colombian's will position AMX in a strong position to take advantage of its investments in the 3G technology."
Abstract This paper looks at the trend among baby boomers towards socially responsible investing, the reasons for this trend, and the benefits of investing in companies that do not actively pursue unethical or socially irresponsible activities. The paper lists some of the more successful socially responsible investmentfunds, strategies for socially responsible investing, and some of the different types of SRI funds available for investors.
From the Paper "Socially Responsible Investing is a product of increased levels of social conscious bvehavior across a wide apectrum of cultural and social priorities. The current demograpnhic of aging investors, those who are 50 years and older, are increasingly made up of the Baby Boom generation. When establishing their personal priorities during their young adult, this generation chose to pursue ecological, and social causes. As they enter a period of increasing levels of investment, it is reasonable that this same group would be equally concerned where they placed their money, and what companies they supported."
Abstract This paper looks at the history of pooled monetary funds. It discusses the difficulties experienced throughout recent history to get this concept publicly accepted but how, now, this is a very popular institution. It examines one example of this concept - Hedge funds, and the difficulties faced in marketing this concept in Europe.
From the paper:
"The idea of pooling money together for the purpose of investing started in Europe in the mid-1800s. The first pooled fund in the United States was created in 1893 for the faculty and staff of Harvard University. On March 21, 1924, the first mutual fund was started in the United States. It was called the Massachusetts Investor's Trust. It grew from $50,000 in assets in 1924 to $392,000 one year later with approximately 200 shareholders. Today there are over 10000 in mutual funds in the US today totaling around $7 trillion dollars with approximately 83 million investors, according to Dustin Woodard at About.com."
Abstract The paper explains the concept of hedge funds and describes their legal structure, fee structure and classification. The paper discusses how, before the regulation of hedge funds, managers could bypass laws related to insider trading and use practices that would not be tolerable in other investment arenas. The paper looks at the "Goldstein vs. Securities and Exchange Commission" (SEC) case and its outcome that has improved the regulatory framework of the SEC.
Outline:
Introduction: What Is a Hedge Fund?
Legal and Fee Structure of Hedge Funds - Platform for Insider Trading
Regulating Hedge Funds
From the Paper "The original concept of a hedge fund is that it offer plays against the market, using short-selling, futures and other derivative products. Hedge funds provide one of the most diversified market activities within investment strategies since it can use a myriad of financial instruments and positions to reduce risk and maximize gains . Hedge funds minimize risk and the volatility of that risk via strategic diversification by selling long or short, buying and selling securities, engaging in opportunities on the futures or bond market. The development of a hedge fund was based on getting an absolute return in all directions. In practice this means that hedge fund managers seek seed freedom to achieve high absolute returns and wish to be rewarded for their performance."
Abstract This paper examines large cap stocks. It defines large cap companies and discusses which types of companies are generally considered to be large cap. The paper then looks at investment in large caps stocks, especially at making such stock purchases through a mutual fundinvestment vehicle and how mutual funds can be classified.
From the Paper "Many of these same investors will be making such stock purchases through a mutual fund investment vehicle. A mutual fund is managed in much the same manner as an individual portfolio. The one key difference is that there are a lot of investors putting their money into a mutual fund. The mutual fund's manager is bound to follow the investment path that would most likely be successful in reaching the mutual fund's goal or objective. Since there are a variety of investors seeking to invest varying dollar amounts, each fund must state explicitly what it is attempting to achieve."
Abstract This paper presents a case study analysis of a fund manager who was charged with investing 100,000,000 euro for a period of approximately two months. The paper discusses the investment objective and the target return on this portfolio and then examines the factors that need to be considered when investing for such an extremely short period of time.
Table of Contents:
Executive Summary
Content Page
Introduction
Investment Strategy
Selection and Adjustments
Changes in Asset Values
Portfolio Performance
Recommendations
From the Paper "The desired objective(s), return on equity, and risk assumption levels of the investor should all be considered when investing monies for the investor. A sense of responsibility towards the investor, and the investor's monies, should be diligently maintained by the manager of such funds. Acquiring the necessary information concerning the investor should be accomplished before the fact and both parties should have an equal understanding of the investment objectives and the risks that will be taken by the manager in order to achieve those investment objectives."
Abstract The paper explains how hedge funds work, how they can have substantial sway over markets and why many pension fundsinvested heavily in hedge funds. The paper then discusses how many hedge fundsinvested heavily in the sub-prime mortgage market, that led to a volatile situation that devastated the pensions of many middle class workers, crippled mortgage lenders and had a broad effect on the economy. The paper considers the argument that homebuyers and investors are not completely to blame for the worldwide credit crunch but contends that people need to take personal responsibility for their own finances. The paper maintains that by bailing them out, we would only be increasing the likelihood that a bubble will happen again when the next get-rich-quick financial fad pops up.
From the Paper "Hedge funds are private investment funds that charge a performance fee of usually around twenty percent. Many legal rules that apply to other types of funds such as mutual funds do not apply to hedge funds. Instead, hedge fund managers write up contracts that spell out the rules governing each particular fund. This allows hedge fund managers to follow more aggressive investment strategies than is legally possible for normal mutual funds. These funds often hedge their investments against negative developments in equity and other markets because the common goal is to create returns that are not necessarily in line with those of the larger financial markets."
Abstract The paper discusses how opportunities for venture funding in China abound and with proper due diligence, good investment opportunities are easily located, because it is such a growing market. The paper explains that the opportunity for foreign venture capital is apparent in China's lack of private funding organizations. The government clearly dominates venture capital funding in China and will do so for the foreseeable future.
Abstract This paper examines and compares ten families of funds that are currently offered to investors in India, comprising approximately 140 different investing schemes. It explores the characteristics of the schemes offered, the investor objectives associated with various types of schemes, the elements of risk, the returns sought, and the net asset value of each of the funds available. Further, it also examines the performance of these schemes visa-vie each other and established benchmarks.
From the Paper "Investment objectives vary according to the age and status of the individual investor, the time frame for the investment, and the level of risk an investor is willing to undertake in order to make a profit. While it is difficult to generalize, standard investment objectives for investors who are younger or just starting out often seek a) to establish an emergency fund, b) to accumulate intermediate and long-term growth, and c) to maximize tax-deferred savings. A good rule of thumb for an emergency fund is to accumulate three to six months of living expenses. To accomplish this, an investor would choose a fund that invested in cash and cash equivalent or fixed savings categories, because they are deemed both safe and liquid, meaning that it would be relatively easy to convert the fund to cash if needed."
Abstract Investments, the stock market and interest rates are closely tied together. This paper examines how there are quantitative measures that can be used to determine the risks and value for investing in corporate bonds, common and preferred stocks and in mutual funds.
From the Paper "Preferred stocks, a class of a company's equity, are cheaper to buy and more liquid than corporate bonds. Companies issuing preferred stocks often yield 8 percent or more. Preferred stocks are closer in kin to bonds than to common stocks. They pay a fixed dividend, their price tends to stay near their par value and they usually have no voting rights. They are called preferred stocks because they stand in line ahead of common shares when it's time to pay out dividends or liquidate the company. However, preferred stockholders do not get their dividends until the bondholders have been paid."
Abstract This paper discusses closed-end mutual funds. It looks at why most investors involved with mutual funds opt for open-end funds for investments. It describes the many types of mutual funds and contends that in contrast with an open-end mutual funds, a so-called closed-end mutual fund is not a mutual fund at all.
From the Paper "The pricing of securities in the financial markets is, in theory, based on the function of the efficient markets hypothesis. The efficient markets hypothesis among other things assumes that all investor always act rationally in relation ..."
