Fund Research And Analysis Harvard Case Solution & Analysis

Introduction

In this report, we attempt to perform the analysis and performance comparison of two open-ended mutual funds that are classified as large stock or growth funds. The two funds are the Fidelity Magellan Fund (FMAGX) and the T. R. Price Blue Chip Growth Fund (TRBCX). The Fidelity Magellan Fund is a fund from the Fidelity family of funds and it is US domiciled. It is one of the world’s best known actively managed mutual funds(Marketwatch, 2017).

It was in June 14, 2008 when the managers of the fund had announced that the fund would be open to the new investors that are looking out for investment for the first time in over a decade. The investment policy of the FMAGX fund seeks for the appreciation of the capital. The fund managerbuys the value or the growth stocks and they rely deeply on the fundamental analysis of the issuers and also the potential for success in light of the current financial conditions, economic and market conditions and the industry conditions(Marketwatch, 2017).

On the other hand, the TRBCX mutual fund maintains the long-term growth appeal under the manager of the fund, Larry Puglia. The fund has a combination of experienced managers, consistent investment policies, strong parent company and reasonable fees. The investment policy of this fund is based on the long-term capital growth and the income generation is the secondary objective of the fund. 80% of the total assets of the fund are invested within the common stocks of the medium sized and the large sized blue chip growth companies(Marketwatch, 2017). The managers focus on those companies especially that have strong financial fundamentals, seasoned management and leading market positions.

 

 

Analysis

A range of different questions has been answered to perform the comparisons and funds analysis as shown below:

1). How do the two funds differ?

There are a number of factors through which we can see that both the funds differ in many aspects, the FMAGX fund is a multi cap growth fund where as the TRBCX fund is a large cap growth fund. The net assets of FMAGX fund are $ 13.57 billion while for the TRBCX fund the net assets are $ 28.29 billion. The expense ratio for the FMAGX fund is much higher as compared to the expense ratio of the TRBCX fund(Fundresearch, 2017).

The expense ratios are 0.84% and 0.72% respectively. The r squared for the FMAGX fund is 95% and for the TRBCX fund, it is 78%, which is quite low. If we compare the fee levels of both the funds then FMAGX fund has an average fee but the fee of the TRBCX fund is below average and it is lower(Fundresearch, 2017). Lastly, the yield of both the funds is also significantly different. The yield for FMAGX fund is higher at 0.55% as compared to 0.06% for the TRBCX fund. The fund summary is shown in the table below:

Fund Summary
FMAGX TRBCX
Net Assets13.5728.29billions
Expense Ratio0.84%0.72%
R Squared95%78%
Fee LevelAverageBelow Average
Yield0.55%0.06%

 

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