Mutual Fund Case Study

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Mutual Fund Analysis

Case Study

Investor Summary
John and Jane Mooney
Working for an investment firm I was recently asked by my boss to help advise two of firm's best clients. The client's names were John and Jane Mooney. Both John and Jane are in their early 40's and have no children. John is a fireman for the local fire department while Jane is a professor at the local community college. The Mooney's annual income is roughly $115,000. The Mooney's own their home and are virtually debt free.

The Mooney's have done well saving for retirement so far. The Mooney's have a combined savings portfolio of roughly $250,000. The allocation of their assets is about 60% domestic stocks, and 40% domestic bonds on the advice of their former investment representative. Over the past five years their portfolio value has really decline due to the instability of U.S. markets as well as low rates on their bond holdings. They have shown some strong interest in adding international stocks to their portfolio, particularly in the Pacific except Japanese sector. They feel that they can perhaps add more growth in their portfolio and maybe hedge against the waning U.S. market. Being very busy and unfamiliar with investing, the Mooney's have asked me to help them pick out a fund in that sector that best fits their investment needs.

Matthews Asian Growth & Income

Quick Stats
CategoryPacific ex-Japan/Value
Fund ManagerG. Paul Matthews
Fund InceptionSeptember 1994
Net Assets$1,060,000,000
Current NAV$13.59
5-Year Average Return18.95%
Annual Holdings Turnover13%
Total Expense Ratio1.69%
Max 12b1 Fee0%
Max Front End Sales Load0%
Max Back End Sales Load0%
Standard Deviation12.39

Matthews Asian G&I Fund is considered a value fund that seeks both capital appreciation and current income. Matthews fund is relatively large with a giant $1.06 billion in assets. This has allowed Matthews fund to diversify well throughout the various sectors of the foreign markets, with the largest percent of holdings in utilities, financials and telecommunications. The largest company holdings of the fund are include China Mobile Hong Kong, Korea Telecom, and Cathay Financial. 65% of the fund is invested in equities of companies all throughout the Pacific Rim. The fund has a low turnover rate of only 13% which shows that the management is investing in good companies and holding with minor adjustments each year. The fund manager is G. Paul Matthews who founded the company in 1994. Previous to this, Matthews has enjoyed a long term of success managing other Pacific funds. Since the funds inception, there has been only one year with negative returns. The last five years have had an average return of almost 19%! With these amazing returns, it's good to know that Matthews fund has very low risk. The funds beta is astounding 0.4 showing that it has half the risk exposure as other funds in the market. The fund also has a huge Jensen's alpha of 19.82 showing its superior risk-adjusted performance. The fund also has a relatively low standard deviation, meaning that the fund has low volatility (which is rare in foreign markets). The best thing about this fund is its extremely low fees. The fund has an overall expense ratio of 1.69%, which is about ½ of a percent below this sectors average. The fund is a no-load fund and has no 12b1 fees. Overall, this is a solid fund. The fund has solid management which reflects the outstanding past performance. With the low risk exposure and even lower fees, this fund is a can't miss.

Fidelity Advisor Emerging Asia

Quick Stats
CategoryPacific ex-Japan/Growth
Fund ManagerYosawadee Polcharoen
Fund InceptionMarch 1994
Net Assets$24,940,000
Current NAV$12.44
5-Year Average Return0.81%
Annual Holdings Turnover172%
Total Expense Ratio2.02%
Max 12b1 Fee0.25%
Max Front End Sales Load5.75%
Max Back End Sales Load0%...
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