Suppose you are a financial advisor who helps create investment plans. Today you
ID: 2738360 • Letter: S
Question
Suppose you are a financial advisor who helps create investment plans. Today you meet with a client aged 35 with an annual income of $65 000 and no debt. (You can make any other assumptions you want.) She says that she wants to invest in a mutual fund in order to have a nice retirement someday; she will not need to withdraw anything until she is 65.
What do you recommend?
Your report must include a specific mutual fund recommendation. The report must include a breakdown of all fees, prior performance as well as a comparison to an appropriate benchmark. In addition, a clear justification for the recommendation must be made.
The report must be in pdf format with a cover page. You can make up some kind advisory stuff in the title if you like or simply call it “Assignment 2.”
Full points are given if guidelines are followed and the content is reasonable. I won’t worry about your fund pick if you can properly explain why it’s good.
Explanation / Answer
Mutual fund is an very good investment oppurtunity specially if it is invested for long term.
In the example investment is made for 30 years, then in that case any good mutual fund would give great retuns.(Approx 12-18 % per annum)
If I take one mutual fund like - "Franklin India Blue Chip Fund" its performance summary is as below -
A Good Mutual fund, in long term say more than 10 years, gives atleast 15% retuns, here in above example this fund has given more that 20% return in 15 years however in 10 years its retun is only 11.88%, its last 3 year performance is 15.11% hence it sets a good benchmark.
About fees and other charges -
Whatever amount is invested in this fund, as on the date of investment whatever will be the NAV of this fund, it will be devided and your fund is converted in units. There are no charges at the time of entry while at the time of exit if period is less than one year then 1% exit load will be there.
Discrete 12 months performance Mar-15 to Mar-16 (Last 1 Year) -3.17% Mar-14 to Mar-15 36.28% Mar-13 to Mar-14 15.76% Compounded Annualized Growth Rate Performance Last 2 Years 14.85% Last 3 Years 15.11% Last 5 Years 9.44% Last 10 Years 11.88% Last 15 Years 20.77% Since Inception (Dec 1, 1993) 21.84% Current Value of Standard Investment of Rs. 10,000 Last 2 Years 13,196.00 Last 3 Years 15,276.00 Last 5 Years 15,710.00 Last 10 Years 30,768.00 Last 15 Years 169,991.00 Since Inception (Dec 1, 1993) 825,889.00