Finance Journal

Review of my retirement portfolio FRESX

Fidelity Real Estate Investment FRESX

I earned about 33% per year with this investment. I am happy that I got a chance to ride on the real estate boom. This fund outperformed its peers in 3 and 5 yr returns. As real investments are losing value I will definitely consider this during my reallocation project. I am thinking of taking out half of the money from this fund. I will write about this in detail when I reallocate the funds.

3 year Risk Statistics
Alpha (against Standard Index) 14.58
Beta (against Standard Index) 1.14
Mean Annual Return 28.83
R-squared (against Standard Index) 29
Standard Deviation 15.60
Sharpe Ratio 1.53
Treynor Ratio 15.31

Morning star rating *** (stayed the same since my investment)
Exp ratio 0.83% ( a slight decrease)
Annual Turnover 61%

Asset Allocation %
Cash 1.02
U.S. Stocks 94.47
Foreign Stocks 4.51
Bonds 0.00
Other 0.0

Source:Yahoo Finance, FundAlarm, Morning Star

Labels: FRESX

posted by Valli @ 10:36 AM 0 comments

Review of my retirement portfolio FPURX

Fidelity Puritan (FPURX)

This is a good investment. Since my investment I earned about 9% annually. Very low risk, and good performance. Morning Star rating stayed the same - 4 stars. Expense ratio came down a little bit to .62%. Annual Turnover rate has also come down from 86 to 78%. Manager Tenure is 4 yrs (average). I chose this fund to get some bonds in my portfolio. I don't have any issues with this fund as of now.

3 year Risk Statistics
Alpha (against Standard Index) 0.63
Beta (against Standard Index) 0.84
Mean Annual Return 10.74
R-squared (against Standard Index) 80
Standard Deviation 5.66
Sharpe Ratio 1.31
Treynor Ratio -0.88

Asset Allocation %
Cash 3.15
U.S. Stocks 57.66
Foreign Stocks 3.93
Bonds 33.17
Other 2.1

Source: Yahoo Finance, Morning Star, Fund Alarm

Labels: FPURX

posted by Valli @ 10:20 AM 0 comments

Review of my retirement portfolio FJSCX

Fidelity Japan Small Co (FJSCX)

In the Japan Stock category, initially I had Fidelity Japan, last year I sold Fidelity Japan and bought this fund. Expense Ratio has come down. Same Manager. Morning Star rating has come down to 4 stars. Their Sharpe and Treynor ratios for 3 and 5 yr returns aren't impressive. Approximately I gained 5% per year on an average which isn't enough for the risk taken.

I am going to hold on to this fund as I think that Japanese economy is strong and will grow. Their wages are increasing, corporate profits are going up, use of raw materials has also increased, though retail sales has to pick up. But given their steady growth in exports to US, it shouldn't be a problem. I will revisit this fund again in 6 months.

As per Fund alarm, its performances were lower than the average of its peers for the returns of past 12 months and 3 yrs (bench mark - schwab intl index). As per Morning Star they are higher (bench mark - Japan Category). Though its performance went down, I don't think there was a big difference when compared with its peer group. Its risk is less. Another think to hold on to the fund is to see if it is getting stabilized as it is closed now. But it could turn otherwise too, have to watch out.

Closed to new investors
Japan Stock Category
Exp ratio 1.02
Annual Turnover 65%

3 Year Modern Portfolio Theory Statistics
Alpha (against Standard Index) -4.66
Beta (against Standard Index) 0.87
Mean Annual Return 11.38
R-squared (against Standard Index) 15
Standard Deviation 22.17
Sharpe Ratio 0.46
Treynor Ratio -11.57

Asset Allocation %
Cash 0.65
U.S. Stocks 0.14
Foreign Stocks 99.21
Bonds 0.00
Other 0.0

Source: Yahoo Finance, Morning Star, Fund Alarm

Labels: FJSCX

posted by Valli @ 9:37 AM 0 comments

Review of My Retirement Portfolio FDGRX

FDGRX (Fidelity Growth Company)

When I considered this investment for my portfolio it didn't satisfy some of my requirements (Morning Star rating, risk..), but with an intutive feeling I invested in this fund. When I invested, the Morning star rating was only 3 stars, now it is 4. Same Manager, no changes in investing strategy. Turnover rate also didn't change much (from 47% to 50%). Even now it is in high risk, but the return doesn't seem to be worth for the risk taken. For the past three years, the return was about 11% which is a decent return to me. But now I am seriously thinking about holding on to this.

Large Growth
Morning Star Rating ****
Closed to new investors
Manager 10 yrs (Steve Wymer)
Exp Ratio 0.96% (increased from 0.85% but below 1%)
Annual Turnover 50%
High Risk
1,3,and 5 year returns are higher compared to the avg returns of its peer group

Asset Allocation %
Cash 0.65
U.S. Stocks 92.54
Foreign Stocks 6.50
Bonds 0.00
Other 0.3

3 year Risk (Modern Portfolio Theory) Statistics
Alpha (against Standard Index) -2.47
Beta (against Standard Index) 1.32
Mean Annual Return 11.11
R-squared (against Standard Index) 68
Standard Deviation 11.76
Sharpe Ratio 0.70
Treynor Ratio -0.26

Source: Yahoo Finance, Morning Star, Fund Alarm

Labels: FDGRX

posted by Valli @ 12:05 PM 0 comments

Review of my retirement portfolio - FCNTX

FCNTX is in my investment portfolio for the past three years. I am satisifed with overall risk and performance. Expense ratio is below 1.0 (one of the requirements for my portfolio). Annual Turnover is well below 100%.

This Fund was closed in March 2006. Though Fund closing is good for existing shareholders as it could stabilize the cash flows and improve its performance, a Morning Star study about fund closings and performance found that the performance detroriates after the closing. As of now, I am going to hold on to this fund because I believe in Will Danoff's consistent investing strategy.

Fidelity Contrafund (FCNTX)
Large Growth
Expense Ratio 0.91%
Annual Turnover 60%
Closed in Mar 2006
Largest equity fund managed by Wil Danoff

Less Risky
Manager Tenure is 16 yrs
3 years return 15.98
Past 12 months return when compared to its best benchmark is -1.89% (Vanguard 500Index)
Its returns are higher than that of its peer group
Morning Star Risk rating low
Morning Star Return Rating high
Morning Star Rating *****

Asset Allocation %
Cash 10.19
U.S. Stocks 67.73
Foreign Stocks 21.69
Bonds 0.00
Other 0.4

3 year (modern portfolio theory) statistics
Alpha (against Standard Index) 3.28
Beta (against Standard Index) 0.99
Mean Annual Return 14.93
R-squared (against Standard Index) 66
Standard Deviation 8.93
Sharpe Ratio 1.27
Treynor Ratio 3.51

Source: Yahoo Finance, Morning Star, Fund Alarm

Labels: FCNTX

posted by Valli @ 10:08 AM 0 comments

SOX - New propositions to ease section 404

On Nov 10th, WSJ reported that regulators announced propositions to ease section 404 of SOX to save time and money for businesses and auditors. This will improve the current conditions for companies deciding which exchange to list their stocks. As more and more accounting, legal, and securities regulations are introduced, particularly after SOX, the number of companies listing their stocks in foreign exchanges have increased considerably.

Labels: 404 SOX, SOX

posted by Valli @ 10:24 AM 0 comments

Investment Securities

Municipal bonds - two categories General obligation bonds: backed by full faith and credit of the govt. Can be paid from any source of revenue. Revenue bonds: can be paid only from certain funds.
Structured notes: FNMA, GNMA and similar institutions pool their securities, whose interest rates could periodically reset based on a reference rate. It has a cap and floor rate included in the agreement.
Securitized assets: Are backed by mortgage loans, auto loans, etc. of similar type and quality. Three categories - Pass thru', CMO, MBS. Pass thru' - backed by mortgage loans, removed from issuer's balance sheet. Interest and principal are 'passed thruough' to investors. CMO - Collateralized Mortgage Obligations are pass thru's divided into multiple tranches each with its own risk and interest rate. MBS - Mortgage backed securities are not removed from issuer's balance sheet. Interest and principal of loans are not connected to those of MBSs.
Stripped securities: Zero coupon bonds that are formed from either principal or interest of Tbonds or MBSs.

Source: Banking Management and Financial Services

posted by Valli @ 10:36 AM 0 comments

Investment Portfolio of Banks

Uses:Stabilize income, offset credit risk exposure in loan portfolio, provide geographic diversification, provide liquidity, reduce tax exposure, hedge against interest rate risk, collateral, flexibility in assets portfolio, and dress up to make it financially stronger.
Money Market (lesser than one year maturity) and Capital Instruments (more than one year maturity) are the two types of investments available for Banks.
Crossroads account - since they stand between cash, deposits, and loans. Increase investment when there is excess cash, decreased loan demand, lesser deposits and vice versa.
Investment securities held by banks FNMA, GNMA, FHLMC, municipals, Non-mortgage related asset backed securities.
Factors involved in choosing investments: Tax exposure, rate of return, interest rate risk, credit risk, business risk, liquidity risk, call risk, prepayment risk, inflation risk, and pledging requirements

Source: 'Bank Management and Financial Services'

Labels: Investment portfolio of Banks

posted by Valli @ 9:54 AM 0 comments