Mutual Funds: Portfolio Structures, Analysis, Management, and Stewardship

Mutual Funds
Portfolio Structures, Analysis, Management, and Stewardship
John A. Haslem, Editor
Kolb Series In Finance
Essential Perspectives
Mutual Funds
The Robert W. Kolb Series in Finance is an unparalleled source of information dedicated to the most important issues in modern finance. Each book focuses on a specific topic in the field of finance and contains contributed chapters from both respected academics and experienced financial professionals. As part of the Robert W. Kolb Series in Finance, the goal of Mutual Funds is to provide you with an authoritative guide to making more informed decisions about this cost–effective investment vehicle.
Using a balance of theory and practical application, this book explores the approaches that will further improve, and lessen the hidden pitfalls, of mutual fund investing. Mutual Funds covers a broad range of topics, including understanding the advantages and disadvantages of mutual funds, evaluating stock/bond allocations within fund portfolios, assessing fund diversification risk, measuring fund returns and risk, and making fund buy/sell decisions. The expert authors put the risks and rewards of mutual fund investing in perspective, examining how to select and evaluate the best mutual funds, mutual fund service advantages and disadvantages, and the long– and short–term effectiveness of mutual funds.
A complete resource and authoritative guide, Mutual Funds will help make the often difficult fund decision process easier—and much more rewarding.

Spis treści:
I. Mutual Funds: Nature, Regulation, and Costs.
Chapter One: The Nature of Mutual Funds by (Conrad Ciccotello).
Attributes of the Open–End Mutual Fund.
The Board of Directors.
Liquidity.
All Equity Capital Structure.
Portfolio Diversification.
Professional Management.
Investor Services.
Mutual Funds and the Competitive Environment.
Employer Spon sored Retirement Plans.
After–Tax Accounts.
References.
About The Author.
Chapter Two: Mutual Fund Regulation and Issues by (Conrad Ciccotello).
Historical Perspective.
Regulation of Open–End Funds.
Recent Regulatory Issues in Open–End Funds.
NAV Pricing and Trading Policies.
Fund Pricing and the (Late) Trading Scandal.
Current Regulatory Issues in Funds.
Board Governance.
Fees.
Performance Reporting.
References.
About The Author.
Chapter Three: The Economics of Mutual Funds by (David M. Smith).
Size and structure of the mutual fund industry.
Mutual fund creation and mortality.
Scale economies: Expenses and fees.
Scale Diseconomies: Fund Returns.
Benefits of mutual fund investing to fund shareholders.
Diversification.
Professional portfolio management.
Ready access to asset classes and market sectors.
Drawbacks of mutual fund investing.
Persistent high fees in some families.
Underperformance relative to index funds.
Tax inefficiency.
Inadequate disclosure.
Financial barriers to mutual fund investing and redemption.
Mutual fund governance and agency problems.
Fund family marketing and cross–subsidization.
Conclusions.
References.
About The Author.
Chapter Four: Mutual Fund Fees and Expenses by (David M. Smith).
Loads.
Expenses.
Management Fees.
Rule 12b–1 Fees.
“Other” Expenses within the Expense Ratio.
The Load Versus Expense Relation.
Distribution Channel.
ETFs and Closed–End Mutual Funds.
Taxes.
Fees and Expenses Internationally.
Charges Not Included in the Expense Ratio.
Partitioning Actively Managed Mutual Fund Fees Based on Alpha and Beta. Separation.
Conclusions.
References.
About The Author.
II. The Realities and Analogies of Investing.
Chapter Five: How Financial Markets Work by (Larry E. Swedroe).
How Markets Set Pr ices.
Point Spreads and Random Errors.
Examining the Evidence.
An Efficient Market.
How Stock Prices Are Set.
Battle of the Discount Stores.
The Financial Equivalent of the Point Spread.
Individual Investors.
Institutional Investors.
The Moral of the Tale.
Great Companies Do Not Make High–Return Investments.
Small Companies versus Large Companies.
Why Great Earnings Don’t Translate Into Great Investment Returns.
The Moral of the Tale.
For Every Buyer There Must Be a Seller.
The Moral of the Tale.
References.
About The Author.
Chapter Six: Active Versus Passive Investing by (Larry E. Swedroe).
Whose Interests Do They Have at Heart?
When Even the Best Aren’t Likely to Win the Game.
The Evidence.
Lots of Counterproductive Activity.
The Moral of the Tale.
Why Is Persistent Outperformance So Hard to Find?
Conclusions.
Investment Graffiti.
The Death of Equities.
The Great Depression of 1990.
Dow 36,000.
The Value of Stock Market Forecasts.
Even if Your Crystal Ball Was Clear.
Conclusions.
Outfoxing the Box.
The Moral of the Tale.
Appendix: Investment Vehicle Recommendations.
References.
About The Author.
III. Fund Types and Comparative Performance, Efficient Markets, Asset Allocation, and Morningstar Analysis.
Chapter Seven: Efficient Markets and Mutual Fund Investing: The Advantages of Index Funds by (Burton Malkiel).
The Justification for Using Index Funds.
The Evidence from U.S. Index Funds.
The Evidence in Favor of Passive Management in World Financial Markets.
Active vs. Passive Management in the Bond Market.
Costs are Important Determinants of Net Returns.
Mutual Funds vs. ETFs.
Stock Market Returns vs. Investor Returns.
Style or Factor Tilts in Mutual Funds.
Conclusions.
References.
About The Author.
Chapter Eight: Asset Allocation: Design and Care of Portfolios by (Willia m J. Bernstein).
The Policy Allocation.
Rebalancing.
Strategic Asset Allocation.
References.
About The Author.
Chapter Nine: The Morningstar Approach to Mutual Fund Analysis – Part I by (Don Phillips and Paul D. Kaplan).
The Cycle of Fear and Greed.
Risk Management.
Approaches to Portfolio Construction.
Tools for Analyzing Funds.
Morningstar Category.
Mutual Fund Analysis Tools.
Returns–Based Analysis.
Total Returns.
Sample Fund Comparison—Historical Performance.
Risk and Risk–Adjusted Performance Measures.
Modern Portfolio Theory Statistics.
Beta.
Alpha.
R–Squared.
Best–Fit Index.
Sample Fund Comparison – Risk and Risk–Adjusted Performance Measures.
The Morningstar RatingTM for Funds.
Risk– and Cost–Adjusted Performance.
Overall and Period–Specific Ratings.
How to Use the Star Rating.
How Not to Use the Star Rating.
Sample Fund Comparison – Star Rating.
Conclusions.
About The Authors.
Chapter Ten: The Morningstar Approach to Mutual Fund Analysis – Part II by (Don Phillips and Paul D. Kaplan).
Holdings–Based Analysis.
Asset Allocation.
Stock Portfolio Analysis.
Income, Costs, and Taxes.
Yield.
Loads.
Expense Ratio.
Tax Analysis.
Qualitative Analysis.
Stewardship GradeSM.
Morningstar Fund Analyst PicksSM.
Analyst Research Report.
Conclusions.
About The Authors.
Chapter Eleven: Building a Portfolio of Mutual Funds: A Morningstar Approach by (Don Phillips and Paul D. Kaplan).
Approaches to Portfolio Construction.
Fund Selection.
Domestic Large–Cap Stocks.
Domestic Small/Mid–Cap Stocks.
Foreign Stocks.
Domestic Bonds.
Portfolio 1 – A Less–Diversified Approach.
Portfolio 2 – A Well–Balanced Approach.
Analysis of the Portfolios.
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