Mutual Funds: Risk and Performance Analysis for Decision Making

FIGURES......Page 10
PREFACE......Page 11
ACKNOWLEDGMENTS......Page 13
1 UNDERSTANDING MUTUAL FUNDS......Page 15
MUTUAL FUNDS AS FINANCIAL INTERMEDIARIES......Page 16
INVESTMENT COMPANIES AND UNIT INVESTMENT TRUSTS......Page 17
THE 1940 ACT AND REGULATION OF INVESTMENT COMPANIES......Page 18
INVESTMENT COMPANIES AND UNIT INVESTMENT TRUSTS: CHARACTERISTICS......Page 25
INVESTMENT COMPANIES: A HISTORICAL NOTE......Page 27
MUTUAL FUNDS AS ORGANIZATIONS......Page 30
2 MUTUAL FUND SERVICE ADVANTAGES......Page 37
DIVERSIFICATION......Page 39
PORTFOLIO THEORY AND RISK: A NOTE......Page 41
CONSTRAINED ATTAINABLE GLOBAL DIVERSIFICATION......Page 43
INVESTMENT OBJECTIVES......Page 45
MUTUAL FUND SHAREHOLDER LIQUIDITY......Page 52
SHAREHOLDER TRANSACTION COSTS......Page 55
SHAREHOLDER SERVICES......Page 64
3 MUTUAL FUND SERVICE ADVANTAGES: PROFESSIONAL MANAGEMENT......Page 72
PROFESSIONAL MANAGEMENT......Page 73
PORTFOLIO MANAGER BACKGROUND......Page 94
4 MUTUAL FUND SERVICE DISADVANTAGES......Page 98
LIMITED TYPES OF ASSETS......Page 100
MUTUAL FUND TRADING COSTS......Page 102
SHAREHOLDER TAX PLANNING......Page 116
REGULATORY ISSUES......Page 126
ASSESSING FUND DISCLOSURE......Page 142
5 MUTUAL FUND SERVICE DISADVANTAGES: EXPENSES......Page 144
MUTUAL FUNDS EXPENSES: NATURE AND PROS AND CONS......Page 145
MUTUAL FUND ATTRIBUTES AND PORTFOLIO MANAGER BACKGROUND......Page 158
6 LONG-TERM INVESTING IN MUTUAL FUNDS AND STOCK/BOND PORTFOLIO ALLOCATIONS......Page 159
LONG-TERM EQUITY INVESTING......Page 161
MARKET TIMING VERSUS BUY-AND-HOLD STRATEGIES......Page 164
TIME DIVERSIFICATION......Page 168
INVESTOR RISK PREFERENCES: BEHAVIORAL......Page 172
INVESTMENT POLICY AND INVESTMENT MANAGEMENT......Page 179
INVESTMENT RISK......Page 180
INVESTOR RISK PREFERENCES: APPLIED......Page 182
PORTFOLIO INVESTMENT OBJECTIVES AND THE CASH BUCKET......Page 186
PASSIVE PORTFOLIO ALLOCATION......Page 189
PASSIVE ASSET ALLOCATION: STOCK VERSUS BONDS......Page 193
PASSIVE ASSET ALLOCATION: PORTFOLIO REBALANCING......Page 195
ACTIVE PORTFOLIO ALLOCATION: MARKET TIMING REVISITED......Page 197
PASSIVE INVESTMENT ALLOCATION: MODEL PORTFOLIOS......Page 198
THE (FINANCIAL) ENGINE THAT COULD......Page 206
7 PORTFOLIO DIVERSIFICATION RISK AND EQUITY STYLE ALLOCATION......Page 208
CLASSIFICATION OF MUTUAL FUNDS......Page 209
EQUITY STYLE ALLOCATION AND STYLE ANALYSIS......Page 211
DEGREE OF CONSTRAINED DIVERSIFICATION AND RISK (TABLE 38)......Page 216
MORNINGSTAR CATEGORY AND INVESTMENT STYLE BOXES......Page 220
MORNINGSTAR STAR RATINGS AND CATEGORY RATINGS......Page 225
MUTUAL FUND RISK......Page 226
FUNDAMENTAL ANALYSIS: VALUE VERSUS GROWTH INVESTMENT STYLES......Page 228
MORNINGSTAR MUTUAL FUND REPORTS......Page 234
DIVERSIFICATION RISK: VALUE VERSUS GROWTH (TABLE 43)......Page 235
DIVERSIFICATION RISK: VALUE/GROWTH INVESTMENT STYLE (TABLE 44)......Page 240
DIVERSIFICATION RISK: CASH ASSET ALLOCATION (TABLE 45)......Page 243
DIVERSIFICATION RISK: MARKET LIQUIDITY (TABLE 46)......Page 248
DIVERSIFICATION RISK: RETURNS DISTRIBUTION (TABLE 47)......Page 253
DIVERSIFICATION RISK: INDUSTRY SECTOR CONCENTRATION (TABLE 48)......Page 254
DIVERSIFICATION RISK: SECURITY CONCENTRATION (TABLE 50)......Page 255
DIVERSIFICATION RISK: VALUE LINE SAFETY AND TIMELINESS (TABLE 51)......Page 256
DIVERSIFICATION RISK: OVERALL ASSESSMENT (TABLE 52)......Page 258
8 MUTUAL FUND PERFORMANCE MEASURES AND BUY/ SELL DECISION CRITERIA......Page 259
CDA ANNUALIZED RATES OF RETURN......Page 260
CDA PERFORMANCE MEASURES......Page 261
COMPUTED RISK/RETURN PERFORMANCE MEASURES......Page 264
CDA RETURNS, PERFORMANCE MEASURES, AND COMPUTED RISK/RETURN PERFORMANCE MEASURES (TABLE 66)......Page 271
MORNINGSTAR RATING AND RISK AND RETURN PERFORMANCE MEASURES (TABLE 67)......Page 272
BUY/SELL DECISION CRITERIA (TABLE 68)......Page 273
9 MUTUAL FUND PERFORMANCE AND PORTFOLIO INVESTMENT STYLE ALLOCATIONS......Page 276
MARKET ANOMALIES......Page 277
PERFORMANCE: VALUE VERSUS GROWTH STOCKS......Page 278
PERFORMANCE: SMALL-CAP. VERSUS LARGE-CAP. STOCKS......Page 284
TWEEDY BROWNE ON VALUE AND SMALL-CAP. INVESTING......Page 286
PERFORMANCE: LARGE FUNDS VERSUS SMALL FUNDS......Page 287
PERFORMANCE: DOMESTIC STOCKS VERSUS INTERNATIONAL STOCKS......Page 289
BOND MUTUAL FUNDS......Page 295
ISSUES IN STOCK AND BOND FUND PERFORMANCE: INDEXING......Page 303
RECOMMENDED PORTFOLIO ALLOCATIONS......Page 312
BOND AND STOCK FUND RECOMMENDATIONS: SIMPLE IS GOOD......Page 313
FUND PERFORMANCE AND PORTFOLIO MANAGER ATTRIBUTES......Page 316
MUTUAL FUND SELECTION AND TIEBREAKERS......Page 318
SUPERSTARS REDUX......Page 321
ACTIVELY MANAGED VERSUS INDEX FUNDS......Page 322
CAN ACTIVELY MANAGED MONEY BEAT THE MARKET?......Page 325
MUTUAL FUND PERFORMANCE: SELECTED ISSUES......Page 330
11 MUTUAL FUNDS: THE NEXT GENERATION......Page 346
MUTUAL FUNDS SINCE THE 1990S......Page 347
NATURE OF EXCHANGE-TRADED FUNDS (ETFs)......Page 352
MAJOR EXCHANGE-TRADED FUNDS......Page 358
CURRENT AND FUTURE DEVELOPMENTS......Page 363
IMPLICATIONS FOR MUTUAL FUNDS......Page 364
12 ECONOMIC AND MARKET INDICATORS: KNOWLEDGE, NOT FAITH......Page 366
IMPLEMENTING THE BUY/SELL DECISION......Page 367
ECONOMIC INDICATORS: DISCUSSION AND SAMPLE MENU......Page 370
MARKET INDICATORS: DISCUSSION AND SAMPLE MENU......Page 383
FINAL COMMENT......Page 396
APPENDIX ONLINE REFERENCES TO MUTUAL FUND AND RELATED INFORMATION (INCLUDING ILLUSTRATIONS)......Page 398
TABLES......Page 401
GLOSSARY......Page 505
REFERENCES......Page 519
INDEX......Page 578