Essay on Portfolio Composition

1033 Words Apr 26th, 2012 5 Pages
Portfolio Composition

Portfolio Composition These days there are all kinds of investments. There are equities, options, bonds, and many others that can go into a selection for any kind of investment vehicle be it an index like the Dow 30, or a mutual fund like MYHAX from Mainstay. What makes things more complicated is when people need to contend with not only the selection process, but also issues with regulation and what the parent company would like to see. Classifications coupled with the current investment environment can make for a very complicated investment selection process. This paper will go into detail about some of how that process can affect organizational decisions concerning portfolio composition. It will choose a Dow
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As rates are near zero, this is a great play on debt that has fallen out of favor. The current investment environment being what it is right now makes MYHAX a great place to put money to work into. As the US government went into a buying frenzy of its own obligations in order to keep rates low it was necessary to look for yield in other places rather than just normal municipal or corporate bonds. Also, going long exclusively was not the best way to go because there was so much room to run having short position to be hedged from market downturns. In order for a fund company to stay competitive it needed an edge, and going short was just the way to go. Most mutual funds are not able to go short, so the only way they can make money if the investments they choose appreciate in value. By going short and long, a fund company can make money coming and going; which is what MYHAX is doing. While their main priority is to look for yield, this is why they are 130% long, but since there is great opportunity to go short this is why they are 30% short as well. As for the Dow 30 organization is just a makeup of 30 companies that are top in their industry and also have stock prices that are high and have done very well. What is interesting about it though is the name is more for historical purposes as the components of the Dow have little to do with industrial anything. This is an index fund where the 30 companies are chosen

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