Type of paper: Research Paper

Topic: Stock Market, Allocation, Investment, Fund, Return, Finance, Money, Equity

Pages: 2

Words: 550

Published: 2023/02/22

Fund Allocation

Criteria for selection
I have always heard during the finance classes that earlier we invest, better are the returns we will get by the end of our retirements. Now, going by that brick-stone notion of the investment world, I have decided to start investing a fixed sum of money every month from the salary amount towards a bond portfolio that is fully diversified in government bonds, corporate bonds, equity bonds and real estate bonds. However, since it is an early stage of my career and also being a person of young age, I will be willing to take risk and would prefer a higher side of my allocation to be in equity bonds; but for only the bonds with five-star rating in morningstar database. I also plan to re-consider the portfolio allocation on yearly basis on the basis of performance of my portfolio.

Bonds Selected

i) AB Large Cap Growth:
A 5-Star rated mid-cap growth fund with high exposure to blue-chip US Stocks. The bond is an aggressive investor in US Stocks with 90.35% allocation being made in the same source, while only 8.19% is in cash reserve and remaining 1.10% in non-US stocks.
The performance of the stock has been enticing with year-to-date return of 7.85% and 3 year annualized return of 21.06%. The top 6 holdings of the company includes:

Apple Inc

CVS Health Inc
Biogen Inc
Facebook Inc
Review and % allocation:
The bond aligns with my investment objective of allocation of funds in an equity-based fund, and with a history of appreciable performance, I prefer to allocate 50% funds of my retirement funds in this bond.
ii) AB Global Bond A Load Waived
A 5-star rated bond with majority holdings in bonds and cash only. At present, 86.57% of the fund allocation has been directed towards bonds, 11.06% in cash reserves and mere 0.13% in US stocks.
Being more of a conservative bond, it has offered year-to-date return of 1.63% and a 3-year annualized return of 3.73%. The top five holdings of the bond are:

Federal National Mortgage Association Bonds

US treasury bonds
US treasury notes -1.125%
US treasury notes- 2.62%
Review and %:
The bond has a conservative investment majorly in government bonds. Therefore, in order to partially offset the risk of equity based bonds selected previously, I will prefer 20% allocation in this fund. Most likely in the years near to my retirement I will prefer high allocation of funds in this fund or another fund in low-risk category.
iii) American Century Global Real Estate R6
A 5-star rated bond with core exposure in real estate related equity funds, both US and International. At present, the fund has 54.02% allocation in real-estate related US stocks and 44.33% in real estate related non-US stocks.
The bond has an impressive performance with year-to-date return of 5.64% return and 3-year average annualized return of 13.90%. The top five holdings of the bond are:

Simon Property Group

Ventas Inc
Prologis Inc
AvalonBay Communities Inc
General Growth Properties Inc
Investing in a real-estate based bond will add diversification to my portfolio. Moreover, the bond has earned good return over the years, and thus, consideration the diversification and performance need of the portfolio, I will prefer 30% allocation in this fund.

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WePapers. (2023, February, 22) Example Of Research Paper On Finance. Retrieved June 04, 2023, from https://www.wepapers.com/samples/example-of-research-paper-on-finance/
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Example Of Research Paper On Finance. Free Essay Examples - WePapers.com. https://www.wepapers.com/samples/example-of-research-paper-on-finance/. Published Feb 22, 2023. Accessed June 04, 2023.

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