F01.justanswer.com
Client InformationYour Aunt Zoe, 40 years old, graduated from Texas Tech University with a Bachelors in Nursing. She has been working for Humana as a lead Nurse in Dallas, TX for 15 years. When she first started working, she did not enroll in the 401(k) at her company. She started contributing into the plan 10 years ago. She contributes 5% of her gross salary annually, and the company also matches 125% of her contribution, up to 6%. The value of her 401(k) has grown nicely over the last 10 years. Zoe knows that you have taken the Investments course from the Personal Financial Literacy program at Texas Tech. Hence, she has asked for your analysis on her current portfolio.Zoe has a higher than average risk tolerance. With that level of risk tolerance, Zoe’s desired asset allocation is below:Overall Allocation?% of Investment PortfolioBond (Fixed Income)25%Stock (Equity)75%World Region Allocation% of Investment PortfolioU.S. & Canada65%International35%Bond Allocation% of Bond PortionShort Term Bond60%Moderate Term Bond40%Long Term Bond0%Stock Allocation% of Stock PortionLarge Cap Value20%Large Cap Growth25%Mid/Small Value30%Mid/Small Growth25%Below is the current allocation of Zoe’s 401(k) plan:Fund nameTicket Symbol$$ in Fund(rounded number)No. of sharesSchwab S&P 500 IndexSWPPX 10,000 318Fidelity Advisor Glbl Capital Apprec TFGETX 10,000 660VANGUARD WORLD FUNDSVWILX 35,000 465OPPENHEIMER LIMITED-TERM BOND FUNDUGTBX 12,000 1288BlackRock US Government Bond Inv BBIGBX 10,000 943Vanguard Small-Cap Value ETFVBR 20,000 191DFA US Vector Equity I DFVEX 8,000 465Humana Inc.HUM 45,000 346Using , you can help Zoe analyze her current portfolio. Watch the following video to learn how to use Morningstar to analyze mutual funds and ETFs (it doesn’t teach you everything and part of the learning curve is for you to play around in ): by analyzing the Overall Allocation (Stock/Bond) of her 401(k) plan. Use the “Portfolio” section of Morningstar to answer the following questions:Does the current asset allocation of Zoe’s 401(k) plan satisfy her desired overall allocation? Please explain your answer (20pts) If it is not, what are the changes that she should make, regarding the bond/stock allocation? In order words, should she sell more bonds to buy more stock or the other way around? (20pts)A good percentage of Zoe’s portfolio is invested in Humana Inc. With the purpose of diversifying the portfolio, do you agree with her decision to invest heavily in her company? Why or why not? (20pts) If you disagree, what do you recommend to her (10pts)Use the “Fee & Expenses” section of Morningstar to answer the following questions:Compared to a similarly weighted hypothetical portfolio, is the average mutual fund expenses higher or lower? Which fund(s) have the highest expense ratio? Which fund(s) have the lowest expense ratio? Any recommendations on lowering the total expenses? (20pts)Now, let’s look at the allocation among different regions. Use the “Portfolio” section of Morningstar to answer the following questions:Compared to her desired World Region Allocation, should Zoe invest more in international markets? Please explain in detail your answer (20pts)Among the funds in Zoe’s portfolio, which funds are heavily invested in the international market? Should she buy or sell more of these funds in order to meet the desired World Region Allocation? (10pts)Move on to the Bond Allocation Analysis. Use the “Portfolio” section of Morningstar to answer the following questionsWhat are the funds in the portfolio that are invested only in bonds? What is the credit quality of those funds? (15pts)What is your observation regarding the current Bond Allocation, compared to the desired Bond Allocation? Does Zoe need to make any changes regarding the allocation of the bond funds based on her stated style? (15pts)Zoe is looking for some high credit bond funds in order to replace the current ones. You can help her find bond funds (or ETFs) through Vanguard. Go to the website and click on “Bond funds” or “Bond ETFs”. Find two high credit bond funds/ETFs that still satisfy the desired bond “Allocation” (Hint: besides the credit quality, also pay attention to the maturity of the bond) (10pts)The last part is the Stock Analysis (Large/Mid/Small Cap Growth/Value) section. In this section, we need to analyze the overall asset style and sector weightings.Based on information in the “Style Details” section, compare the current Stock Allocation style with the desired Stock Allocation style? Which asset class is heavily overweighed/underweighted (overall)? (10pts)In the “Stock Style” section, you will find the funds that invested in stock in the current portfolio. Among those funds, which fund heavily invests in Small-Cap Growth Stock? Which fund heavily invests in Large-Cap Value Stock? (10pts)In the “Stock Sector” section, you will find the information regarding the stock sectors that Zoe invests in. What are the three main sectors that stocks are categorized in (overall)? Compare the diversification between the main sectors of the portfolio with the S&P 500 index. Which sectors is the portfolio overweighed and under-weighed? (20pts) ................
................
In order to avoid copyright disputes, this page is only a partial summary.
To fulfill the demand for quickly locating and searching documents.
It is intelligent file search solution for home and business.