Assignment: Financial Markets
I. Assume you are an investment advisor. Your client is unsure what are the main benefits and reasons for investing in a Mutual Fund or in an index fund with an ETFs.
• Explain the main differences and similarities between each other
• Explain what are the main advantage and disadvantage of investing in mutual funds or ETFs versus investing in Equity Stocks.
• Explain the difference between investing in fixed income and an ETF that follows the S&P 500.
• Explain the main difference between active and passive management
• Explain what is a sector fund
II. Go to morningstar website
• What information does provide the Morningstar Style Box?
• Morningstar assigns a Rating to each Mutual Fund. What are the criteria they use to assign this rating?
• Use the information provided above (style box and ratings) to choose 2 different mutual funds/ETFs (4 funds/ETFs per each portfolio) to prepare 2 portfolios for 2 different types of investors:
o Aggressive
o Conservative
o The total amount to invest in each portfolio is 10.000€.
• In half a page for each portfolio, explain:
o The rationale behind choosing the given funds/ETFs per each portfolio
o The criteria chosen to build each portfolio
• Follow up the prices for all 2 portfolios. Calculate the return for each portfolio at the end of theweek. Explain your results.
Format your assignment according to the give formatting requirements:
• The answer must be using Times New Roman font (size 12), double spaced, typed, with one-inch margins on all sides.
• The response also includes a cover page containing the student's name, the title of the assignment, the course title, and the date. The cover page is not included in the required page length.
• Also include a reference page. The references and Citations should follow APA format. The reference page is not included in the required page length.