Stock Investment Analysis - Assignment Example

What each and every investment requires is to perform well and fetch good returns. This is made possible when the business or investment is able to consistently build and maintain a long term growth on capital. The FLCSX fund tries to meet this general requirement through the investment in large capitalization stocks across the world (Vishwanath, & Krishnamurti, 2009). These large capitalization companies are the companies that are firmly established and have a high return on their capital. The FLCSX fund maintains a massive 80% of its investments in these kinds of companies (Elton, 2010).

In essence there are some benefits that are expected to be drawn from these kinds of companies which include security and lower risk as compared to the small and middle cap companies (Vishwanath, & Krishnamurti, 2009). However these companies may not offer good returns as compared to the middle and small cap companies when one invests in stocks, which are the main area of investment for the FLCSX fund. This fund also poses some possibility of risk due the investment in foreign stocks. Naturally the foreign stocks experience some difficulties especially in areas such as economic developments political state of the invested country among other factors (Vishwanath, & Krishnamurti, 2009). . The FLCSX fund fetches good returns which are increasing and though the C&P 500 fund started off at a higher level.

As time went by the FLCSX fund was able to create a margin between the C&P500 fund to a high of more than 5% (Elton, 2010). However in the past three year period it was able to pick up and close the margin to 3%. This is greatly attributed to the recession of 2009 taking into consideration the earlier discussed in their investment strategy of FLCSX fund. However the trend reversed and in the past one year there has been a margin of 6%. Therefore it can be concluded that the performance of the FLCSX fund has been above bar.

The fund initially started off at a point below the benchmark of C&P500 but it was able to strengthen and register a high of 6% above the benchmark in the past one year. The financial performance of the FLCSX fund has had an upward trend over some years. However the fund is faced by some volatility risks that include currency exchange rates, political structures, interest rates and regulatory risks among other risks. These risks impact in their own unique way to the returns that the company gets (Elton, 2010).

The currency exchange rates are known to change day in day out and their fluctuations can lead to a gain or a loss. When the rates go down the company is set to realize low profits as they will get less after the exchange. However when the exchange rates go up the company will realize more after they trade in the currencies (Elton, 2010). The political state also affects returns that are fetched from the stocks and securities of FLCSX. These securities trade in the local and foreign markets this increases the risk as the political situations of the in the companies invested in