Since how you evaluate the concept of market efficiencies in general, and the EMH specifically, affects your overall philosophy of investment. Since mutual funds are collections of securities that are essentially a managed portfolio, the same rules of risk and return apply.

If you believe in that markets follow the strong-form of the EMH, what conclusions can you make as an investor about the following investment concepts:

The ability of an investor to outperform the market in the long run

The ability of an investor to outperform the market in the short run

The choices by an investor in an active or passive investment strategy

Evaluate Vanguard and describe the relevant characteristics of your particular fund, being sure to note its type of fund, performance rating, and investment goal. Further, take some time to discuss the pros and cons of investing in mutual funds vs. investing in individual securities.

Risk, Return, and Portfolio Diversification

Explain the two basic risks that are inherent in developing any financial portfolio. Be sure to identify which risks are reduced with the creation of a portfolio, and the factors that affect the types of risk that are managed within the portfolio. As part of your answer, be sure to answer the question- how many securities does it take to effectively diversify a portfolio?

Tying it all Together

Since mutual funds are collections of securities that are essentially a managed portfolio, the same rules of risk and return apply. From your readings on the Efficient Market Hypothesis, do you believe that mutual funds outperform the market as a whole? Explain.