Financial Management
Introduction
Blue Chip Growth Fund provides investors with a lucrative way to grow their portfolio.
This fund has been performing above the average market rate for years due to investment in high performance companies.
The primary investments of the Blue Chip Growth Fund include large and medium sized common stock.
The fund has been in existence since June 1993 (“T.
Rowe Price Blue Chip Growth Fund”, 2020).
The fund has a stake in more than 124 holdings with its total assets being valued at $76.93 billion.
Analysis of the Blue Chip Growth Fund and the Mutual Fund Industry There are several factors that have enabled the Blue Chip Growth Fund to stand out in terms of posting exemplary performance.
Diversity is one of the main factors that have contributed to its success.
The fund’s managers have a variety of interests spanning up to 124 dissimilar holdings.
This is has enabled the company to reduce risk that is associated with overdependence on a particular aspect of the economy.
Another contributing factor is investments in blue chip companies.
Investment in well-established global companies reduces the risk associated with startup companies.
Those risks include mismanagement and bankruptcy which can lead to loss of investor funds.
Huge companies also make huge amounts of returns thus they are highly lucrative investments.
The strategy of a mutual fund is highly intertwined with its chances of success.
If the fund has a poorly thought out and executed strategy the chances of success are very minimal.
The fundamental responsibility of portfolio managers is to decide and manage investments on behalf of their clients.
The factors that influence the decisions of the portfolio manager on the best investments include the nature of the client in terms of taking risks and his/her financial ability.
A financial manager needs to be well versed with the fluctuations in the financial market.
This will enable them to make informed decisions when managing their clients’ investments.
Fundamental securities analysis involves measuring a stock based on its intrinsic value.
Technical securities analysis on the other hand focuses on the volume and price of a stock.
Mutual funds in general perform much better than the general market.
The difference in performance between the general market and mutual funds can be attributed to the amount of knowledge and skills possessed by portfolio managers.
Capital market efficiency can be described as the extent of accuracy that the current data in the market can be reflected by the present asset price (“Financial Terms”, 2020).
The capital markets efficiency is important to fund managers because it assists them to make informed decisions.
They can use market characteristics to weak, semi-strong or strong efficiency to determine whether the current market data is reliable in making investments.
Recommendations As an adviser of the equity markets I would recommend to the wealthy individuals to invest in Puglia’s Blue Chip Growth Fund.
This is due to the higher returns they would get from their investments as part of the Fund.
Equity markets are more profitable and less risky when the investment is made in huge amounts.
That is why it is more profitable to invest in mutual funds rather than making individual investments.
References
Financial Terms.
Nasdaq.
(2020).
Retrieved 23 May 2020, from https://www.nasdaq.com/glossary/c/capital-market-efficiency.
T.
Rowe Price Blue Chip Growth Fund.
US News.
(2020).
Retrieved 23 May 2020, from https://money.usnews.com/funds/mutual-funds/large-growth/t-rowe-price-blue-chip-growth-fund/trbcx.