The Mutual Fund Screen

Meng Hao

(1208162393)

Fin331

Activity #1

The Mutual Fund Screen

1/26/2016

Summary:

  Vanguard PRIMECAP Adm is my first choice in the market pool where I picked 5 funds after analyzing the Morningstar rating, expense ratio, bear market% rank, price earning ratio and annual return % rank category from the whole market.

Factors:

  There are five funds in my market pool. In Morningstar, they have similar large growth rate. The large growth rate indicates that the company has a higher income than the last year. From the last five years’ data, each fund has a stably increasing trend.

  The Morningstar rate consist companies’ performance and reduce the risk that come from strong short-term performance which indicate that Morningstar rate is more accurate to judge a funds’ long-term performance in the fewer years. To choose “four star” as the criterion is to provide a reference and compare them.

  The expense ratio directly effected by operating cost and all other basic expense which are major operating expenses. Therefore, all of these five fund with a lower expense ratio reflects that they all can keep a high level net income.

  The bear market percentage rank indicates the company’ performance relative to the whole fund market in its asset; “a bear market is defined as all months in the past five years that the S&P 500 lost more than 3%” (Monrningstar.com).

  Price/ Earning Ratio involves with three factor: price, cost of the companies’ stock and trailing of 12-month per share by dividing these two figures. The ratio indicates each portfolio is represented by the percentage equity of asset. the large number is the great influence; the fund will be.

Annual Return mean it reflects the companies’ both income and capital’s gains and loses.

Analysis:

I recommend Vanguard PRIMECAP Adm(VHCAX) as a long-term potential and worthy fund to invest. From above criterions, Vanguard PRIMECAP Adm has good valuation under these five criterion through compared with other funds.

In the historical data, VHCAX has a high return, below average risk rate and the highest rating among these funds. The large growth is 15,513.28USD; the growth rate of VHCAX is higher than the average large growth rate. “NAV”, net asset value, is a dominating valuation method to calculate a company’s existing value. From the report, “VHCAX” has a good record in the past decade except for 2008 and 2015 with an economic depression. From the last fives year, the expense ratio kept a low percentage (0.36%) from 2011-2014; in 2015, it decreased 0.02%. at the same time, its income also higher than the last years’ within five years. This data states that VHCAX has a stable net income level. From this table, the Net asset show a constantly increasing trend from 3,371 to 38,229 in this decade. In price/ earnings ratio, VHCAX has a higher ratio in my market pool.