Posted: February 4th, 2015

conclusion of the research paper

conclusion of the research paper

read the assignment and chart attatched and please right the conclusion.

Conclusion

a) which fund is best & why
b) is this fund appropriate for a moderately conservative investor

No. 2 Top Holdings
The “BMO S&P/TSX EW Banks Index ETF*” fund is not very diversified in terms of major holdings. This is because it only invests into the 6 largest Canadian banks. All

its investments are focused in the Canadian financial sector. On the other hand, the “iShares S&P/TSX Cap Financials Idx*” fund is a little more diversified in terms

of major holdings. It not only buys bank shares, but also insurance companies. Its exposure however is only limited to the Canadian financial sector. However, the

“Fidelity Glbl Financial Serv Cl-F*” fund is the most diversified when it comes to major holdings. This is because the companies it invests into are spread out over a

large geographic area which includes Canada, the U.S. and the U.K.

No. 3 Risk & Beta, Index & Group Average
According to the table, the “BMO S&P/TSX EW Banks ETF*” and the “iShares S&P/TSX Cap Financial Idx*” funds are less risky because to their low measures of Beta (0.70)

and (0.80) respectively, which makes them less volatile compared to the market. Also, having low beta makes the price of the security to be less fluctuated, but also

involves less return. On the other hand, the “Fidelity Glbl Financial Services Cl-F*” fund seems to have the highest Beta value (0.93) which is still less than the

standard 1. It is still in the range of being considering as an acceptable fund with less risk. Thus, the three funds can be considered low in risk because they fall

into the low Beta category. Even more, if we compare the three funds with Index and Group Average Beta, they are slightly different in volatility, putting them in

almost in the same range of risk. Nevertheless, the “BMO S&P/TSX EW Banks ETF*” is still the best option because it has the lowest level of risk with Risk (9.4) and

Beta (0.70) compared to Group Ave. Risk (9.61) and Index Risk (9.68), and Group Ave. Beta (0.84) and Index Beta (1.0).

No. 4 Graphs

When comparing “BMO S&P/TSX EW Banks Index ETF*” to the “Globe Financial Services Peer Index**”, we can find that the fund has outperformed the index by $1,830 over

the last 5 years. In the same way, the “Fidelity Glbl Financial Serv Cl-F*” has outperformed the “Globe Financial Services Peer Index**”, index by $2,180 over the 5

years. Even more, the “iShares S&P/TSX Cap Financials Idx*” has outperformed the “Globe Financial Services Peer Index**”, by $1,434 over the last 5 years. Thus, over

the last 5 years from Dec. 2009 to Dec. 2014, we can determine the best fund would have been “Fidelity Glbl Financial Serv Cl-F*”. For example, if we had invested

$10,000 in “Fidelity Glbl Financial Serv Cl-F*” in Dec. 2009 then we would have gained $2,180 more than we would gained if we had invested $10,000 into the “Globe

Financial Services Peer Index**” in Dec. 2009. This gain would have been greater than the gains we would have realized if we had invested the same amount of money for

the same period of time in the other two mutual funds.
*Mutual Fund
**Index Benchmark

No. 5 Comment on the Fund Manager

“Rob Bechard” of “Jones Heward Investment Counsel” has been actively serving as the portfolio manager of “BMO S&P/TSX EW Banks Index ETF” for about 4 years 8 months

since May, 2010. The fund has returned 12.32% under this manager. On the other hand, “Boutsis Sotiris” and the “Global Equity Team” of “Fidelity Investments Canada

ULC” have been actively serving as the portfolio managers of “Fidelity Glbl Financial Serv Cl-F” for 5 and 8 years respectively since January, 2010 and April, 2006

respectively. The fund has returned 8.71% and 0.6% respectively under these managers. In addition, the “BlackRock Asset Management – Mgmt Team” of “BlackRock Asset

Management Canada Limited” has been actively serving as the portfolio manager of “iShares S&P/TSX Cap Financials Idx” for about 12 years 7 months since June, 2002. The

fund has returned 9.07% under them.

Conclusion
BMO S&P/TSX EW Banks Index ETF is the best opton

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