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Money Management - Portfolio of funds or ETF - Essay Example

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Executive Summary Most businesses rely on capital and investments to initiate and grow their businesses. These businesses rely on different sources of capital income in undertaking their business needs. Some of the common forms of investment include bonds, stocks, certificates and Exchange Traded Funds…
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Money Management - Portfolio of funds or ETF
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Download file to see previous pages Most of these investors turned to government bonds, certificates and private or corporate bonds from reputable firms (Madura, 2008, p.13). This trend led to the emergence of special funds which allowed small investors to pool funds and investment in a number of securities or stocks. These funds are managed by fund managers which became popular with huge companies like insurance firms and banks. However the costs of managing these funds were high and some investors looked for other options to invest. This led to the emergence of Exchange Traded Funds (ETFs), which allowed investors to put their money on investment funds to be traded on stock exchanges (Abner, 2010). ETF investment funds incorporate an array of assets such as stocks, commodities or bonds and trades at a price close to the net value of these combined investments. For the many years it has been in existence, EFT’s have been successful with current stock markets due to its flexibility and low risk. Table of Contents Executive Summary 1 Table of Contents 2 Introduction 3 Individual Analysis 3 EFT Analysis 5 Swiss Based ETFs 5 Other Managed Funds (ETFs) 6 Personal Asset Allocation 8 The art of investing requires careful planning in asset allocation since the way you allocate your assets reflects the return on your investment. For instance, if you have $ 100, 000, you should invest in a number of investment options. Time factor is one of the most crucial factors to watch out while investing. Looking at the Swiss market, we witness that the some mutual funds have been performing very well compared to some ETFs. Therefore, it not easy to conclude that mutual funds are better than ETFs or vice-versa, the most important factor is tracking these investments over a suggested period of time (Ferri, 2011). A look at ComStage Stoxx Europe 600 ETF Household goods based product we notice that this ETF tracks household goods stocks in the Swiss market. This ETF has performed well over the past two years returning 40.2% compared to the ComStage Stoxx Europe 600 Food & beverages ETF which returned only 24.1% as witnessed by table 4 in the appendix. In comparison to the United States of America where there is a mid cap fund that has returned over 41.87%. This performance is better than the ETF based investment option in Switzerland (Wagner, 2008). This mutual fund is known as the JB holdings fund and it has invested in different segments based on a selected benchmark. A list of investments in the JB holdings fund is shown by table 5 in the appendix. Based on the analysis of the different ETFs and funds listed above, it is difficult to choose the best investment option by solely choosing and ETF or fund based investment (Madura, 2008). The best investment decision to undertake when investing in an ETF or fund is to analyze the industry or benchmark used in implementing the fund or ETF product. Time factor is also very important since most ETFs or funds take a minimum of three years for the investment to make marginal gains. 8 Current Investing Trends 8 References 12 Appendix 14 Introduction The art of investing is very difficult and challenging and many a times, people find it difficult to invest. Several investment options are available to potential investors interested in making profits. Investing is a risky venture and many people prefer to invest in low risk investments. As a result, many investment banks and ...Download file to see next pagesRead More
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