Question

Imagine that you’ve just inherited $25,000. Now you’re faced with the “problem” of how to spend it. You could make a down payment on a condo or on that sports car you’ve always wanted. Or you could build a mutual fund portfolio. After some soul searching, you decide to build a $25,000 mutual fund portfolio. Using actual mutual funds and actual quoted prices, come up with a plan to invest as much of the $25,000 as you can in a portfolio of mutual funds. (In addition to one or more open-end funds, include at least one CEF or ETF.) Be specific! Briefly describe your planned portfolio, including the invest-ment objectives you are trying to achieve

Answer 1

To specify the investment objectives, we need to consider the age of the investor also. For this study, assume that the investor is about 25 years old and having regular income source for obligations.

Hence, I can invest this $ 25,000 in mutual funds, for this I wish to select various funds on sector wise. There are above 4500 active mutual funds in USA, among those I wish to select 5 funds and wish to invest $5000 in each fund. It may includes:

1. SEI High Yield Bond fund: which is having average return of 4.5% for the last 3 years. I want to invest $5000 in this fund where the returns are secure in nature. It does not mean that I definitely get 4.5% or more, but definitely I will get some positive on this fund.
2. Fidelity Flex freedom 2015 fund: it is having the average returns of 5.5% over the past, and its expense ratio is much lesser than any other fund.
3. PGIM High Yield fund: which is having about 4% of average returns and good performance even the market is at crash stages.
4. 1290 Convertible Securities Fund: it is having an average return of 8.90%, providing attractive returns to the investors.
5. iPath Global ETN: is having higher average return.

For this investment, my objective is, making higher amount of investment into growth schemes, and a little amount is invested into regular income funds.