Question
The trading and performance data for five different mutual funds are provided below: Fund 1 Fund 2 Fund 3 Fund 4 Fund 5 Expense Ratio
The trading and performance data for five different mutual funds are provided below:
| Fund 1 | Fund 2 | Fund 3 | Fund 4 | Fund 5 |
Expense Ratio | 0.23% | 0.98% | 0.45% | 0.12% | 1.89% |
Tax-adjusted Return, 3-year avg | 8.78% | 8.87% | 9.39% | 8.10% | 9.32% |
Pretax Return, 3-year avg. | 13.78% | 11.98% | 10.12% | 9.83% | 12.56% |
Assets under management (Mill) | $400.00 | $500.00 | $1,200.00 | $900.00 | $600.00 |
Security Sales, past 12 months (mil) | $39.00 | $300.00 | $850.00 | $390.00 | $400.00 |
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Which two funds are most likely to be actively managed and which two funds are most likely to be passive funds? Justify with calculations.
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Which funds were the most and least tax efficient in the operations? (Use the tax cost ratio and justify.)
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As a rational investor, which fund will you invest in? Justify.
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