Question: This project is not a group project. Your submission should represent your individual effort. In Accordance with Penn State's Academic Integrity Policies, if I suspect that your submission does not represent your individual effort, you may receive a zero on the assignment at the instructor's discretion.
In this special project, you will learn how to analyze a mutual fund using free software on Morningstar.com, which is widely used by professionals with a paid subscription for a more robust access level.
Navigate to morningstar's website to an external site. At some point in the process you will be asked to sign up for an account. You DO NOT NEED PAID ACCESS TO COMPLETE THIS ASSIGNMENT. However, you will need to sign up for the free access account. Select the "Tools" tab, then in the middle of the screen, select "Mutual Fund" under "Basic Screeners." Under "Ratings and Risk," check the box next to the 5 stars. Use any of the other search features on the page that interest you. I recommend selecting, under the "Cost and Purchase" section, the option for "no-load funds only." Once you have made some screening choices, then select "Show Results" and the bottom of the page. I do not expect you to be an expert mutual fund screener...just play with it and see what you can learn through exploration. You may need to adjust your screener multiple times before you fine tune it as desired...the important component is to ONLY USE 5 STAR FUNDS.
Now, on the pull-down menu next to "View:" select "Performance." You can sort these 5-Star funds by clicking on their column heading, such as the "1-Year Return", and the funds will resort in rank order. Look for consistency across time periods. This is one way to find a list of funds that may deserve further attention. Pick one fund to analyze and pay special attention to all of the following:
1. Performance: Current and Trend (HINT: check the top of the "Quotes" page...What should you compare returns against?)
2. Are there any apparent risks in the top holdings? (HINT: "Top Holdings" section on "Quotes" page...focus on concentration risk)
3. Sector Weightings
4. Style Map consistency - any drift?
5. Risk & Return vs. the category (HINT: Look on the "Quote" page)
6. Any thoughts about the fund's management? (HINT: "Management" tab...tenure, qualifications, what else...)
7. What is the tax scenario for your fund? (HINT: "Tax" tab...what did we talk about in the lesson?)
8. What does the expense picture look like (/HINT: "Expense" tab...be very specific)
9. What trend to you see in upside capture, downside capture, and the capture ratio for your fund? How does this compare with the industry? Be specific.
You may discuss more items than those listed above if you so choose, but be sure to cover each one of the listed topics. Each topic listed above is worth 1 point. The other 1 point is for grammar. You may use the fund that you find through this process in your Stock Trak Project, but you are not required to do so.
You may want to include screen shots of a graphic (using the Snipping Tool in Windows) to enhance your paper. You cannot use large images to replace required discussion content. See my guidelines for all written assignments in the Course Introduction Module.
Please organize your paper into subheadings for each numbered section to make it easier for me to read your thoughts. You do not need to label each subheading as "1" through "9." Your final report should look as if it were ready to hand to a client to explain the nuances of your chosen mutual fund.
Do not use target dated funds (Like Fidelity 2055 Fund), Long/short funds, or managed futures funds for this project.
Required Formatting: You need to write a 1-2 page, single-spaced paper detailing what you have discovered. Your document should be in Times New Roman, 12 point font with 1-inch margins. Type your name and the name of your mutual fund (along with the ticker symbol - five letters that end in "X") in the Header ("Insert" tab, then select "Header" in MS Word). Do not include a heading in the body of your text to fill space...I will remove it when determining the length requirement. In your first sentence, you need to tell me the full name and the symbol of the mutual fund that you are analyzing. You may use 1 image (google "snipping tool" if you do not know how to use it), but it needs to be a small image that is nested into a paragraph.