Active and Passive Mutual Funds Essay

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Total Length: 937 words ( 3 double-spaced pages)

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1. Which mutual fund or funds did you choose, and why? Please include a discussion about your choice of active or passive funds



The mutual funds that I selected include Fidelity Total Bond, Vanguard Health Care, and Dodge & Cox Stock. These three mutual funds are suitable investment opportunities for generating strong returns for the investor. I selected the Vanguard Health Care Fund because it is an active fund that favors safer portfolio of stocks. In particular, the fund fundamentally invests in medium and large capitalization stocks within the international healthcare industry. In addition, the fees are specifically low despite the fact that it is actively managed. The fund purposes to maintain the fees and expenses to be considerably low, in spite of the fact that funds that are actively managed have greater operating costs as compared to passive funds. Most of all, in comparison to its peers, Vanguard Healthcare Fund is strong in terms of performance, low costs as well as efficacious management (Wathen, 2016).



Secondly, Dodge & Cox Stock was selected for the reason that it is an active fund that has a significant and strong performance for incessant and strong returns, low expenses and having a proficient management with great experience. In addition, the load fees are set at only 0.52 percent.

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The mutual fund is a great investment as it lays emphasis on high-quality stocks with large capitalization value, for instance, Wells Fargo & Company, Bank of America Corporation, and Charles Schwab Corporation. The key prospect of this mutual fund is that its inclinations to the financial sector implies that it will have a good performance in the prevailing, increasing interest rate setting. More so, the experienced management team appears to deliver in the long-term period as well (Thune, 2017). Fidelity Total Bond is the other selected mutual fund. One of the key reasons why this is a fitting investment opportunity is for the reason that trust has generated a mean yearly return of 5.15 percent, being able to outperform its benchmarks. In addition, the yearly expenses of the scheme are considerably sensible, with its prevailing expense ratio being 0.45 percent. Moreover, the scheme is positioning itself to endure market pressures by carrying out a barbell approach. This takes into account investing in bonds that have the shortest and longest maturities and evading those with mid-ranged securities.



2. How much did you spend, including transaction fees?



The total amount spent including the transaction fees is $99,036.82

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References

Anspach, D. (2016). Actively Managed Investing vs. Passive Investing. The Balance. Retrieved from: https://www.thebalance.com/actively-managed-investing-vs-index-funds-2388517

Thune, K. (2017). 7 “Best of the Best” Mutual Funds to Buy. Investor Place. Retrieved from: https://investorplace.com/2017/09/7-best-mutual-funds-to-buy/#.Whr0_FWWbIW

Wathen, J. (2016). Vanguard Healthcare Fund: 3 Things You Must Know Before Buying This Health Fund. The Motley Fool. Retrieved from: https://www.fool.com/investing/2016/10/21/vanguard-healthcare-fund-3-things-you-must-know-bu.aspx
 

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