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An investor's portfolio consists of $680,000 held in 17 mutual funds and exchange-traded funds (ETFs). Each fund spans one or more asset classes. For example,
An investor's portfolio consists of $680,000 held in 17 mutual funds and exchange-traded funds (ETFs). Each fund spans one or more asset classes. For example, the holdings of fund 11 [Pershares Zacks MicroCap ETF (PZI) are 0.7% domestic mid cap, 16.3% domestic small cap, 76.0% domestic micro cap, 0.1% international mid cap, 6.7% international small/micro cap, and 0.3% cash. The spreadsheet "Exam 2 Problem 4 Data.xlsx" shows the asset classes in which the investor wishes to diversify the portfolio (see row 4). The 17 funds are shown in column B, and the current holdings of $40,000 per fund in column C. Cells D5:Q21 indicate the percentages of each fund in each asset class. This allows easy computation of row 22, the total dollar holdings in each asset class. Thus, row 23 shows the actual percentage of the portfolio in each asset class. These percentages deviate from the investor's desired percentages in each asset class, which are summarized in the table below. Domestic Asset Class Large Cap (>$10B) Mid Cap ($2B-10B) Small Cap ($200M-2B) Micro Cap ( $10B) Mid Cap ($2B-10B) Small & Micro Cap ($10B) Mid Cap ($2B-10B) Small Cap ($200M-2B) Micro Cap ( $10B) Mid Cap ($2B-10B) Small & Micro Cap (
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