Transcript Pioneer Funds To Choose or Not to Choose An Analysis of an ORP.

Pioneer Funds
To Choose or Not to Choose
An Analysis of an ORP
Introduction
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Purpose of Project
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Who is eligible & Risks of ORP?
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Evaluate returns for those participating in the ORP
provider’s fund offerings
Investment strategy, tax situation, style of manager
Manage own investments
Temporal & Index Benchmark of Pioneer Group
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3 yr returns on S&P 500 Index
Important Aspect of Mutual Funds
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What is a mutual fund?
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Why you should invest in a mutual fund?
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“Pool of money”
Diversify risk
Time and Fund Management Expertise
Disadvantages of mutual funds?
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Limits potential gains
Diminished returns due to commission & fees
Types of Mutual Funds
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Low-to-Medium Risk
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Money market funds
o
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Minimal trading activity
Balanced funds
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High diversification
Index funds
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Grow capital, generate income
Large cap funds
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High Risk
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ST securities, low rates
Fund of funds
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Example: Wal-Mart
Pure bonds
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Small cap funds
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Keep principal until maturity
IPO, no dividends
International funds
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Volatility financial mkt. abroad
History of Pioneer
“Pioneer
Fund” founded in 1928 by Philip
Carret
Philip Carret
–friends
with WARREN Buffet
–Wizard of the market
–13% average return in 55 yrs
Pioneer Today
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Pioneer today is owned by Uni Credito
Italiano Banking Group based in Milan
Pioneer Investments has 180 investors in 4
cities: Boston, Dublin, Milian, and Sinagpore
Investment in the US $35 Billion
Investments in the World $150 Billion
Approximately 40 different funds.
Evaluation Method
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Three methods
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Morningstar “Star” Rating
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1-5 stars
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Compare to S&P
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Takes into account relative risk adjusted return over
multiple time periods including all fees and expenses
for 3 year return
Compare to Benchmark
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For 3 year return
Pioneer Star Rating
16
14
12
10
8
# of Funds
6
4
2
0
1-Star
2-Star
3-Star
4-Star
5-Star
NR
Pioneer Funds vs. Benchmarks
(3 Year Returns)
Pioneer vs. Specific Benchmark (3 Year Returns)
Return % Against Benchmark
12
7
2
-3
A
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Q
R
S
T
U
V
W
X
Y
-8
-13
Fund Name
LEGEND
A = Small Company
H = International Equity
B = Global High Yield
I = Balanced
C = Mid Cap Growth
J = Fund B
D = International Value
K = High Yield
E = Growth Opportunities L = Research
F = Pioneer Small Cap Val M = Growth Shares
G = Europe
N = Value
O = Mid Cap Value
V = Municipal Bond
P = Equity Income
W = Bond
Q = Tax Free Income
X = Europe Select
R = America Income
Y = Strategic Income
S = Cash Reserves
Z = Emerging Markets
T = Real Estate
U = California Tax-Free Income
Z
Pioneer Fund Expense Ratios
2.5
2.32
1.78
2
1.50
1.5
1.00
1
Pioneer Avg.
Industry *
0.5
0
Equity
Fixed Income
* Based on American Association of Individual Investors (AAII) recommendations
Conclusion
its in the results
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High expense ratios
Under performed the S&P 500 index
Under performed temporal benchmarks
Low Morningstar ratings
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Some non-existent
Low management tenure
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Recently purchased by a large banking group
Conclusion
Limitations
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Data collected using only Morningstar and Pioneer’s
websites
Needs a comparison to other ORP choices
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Results tend to support EMH
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May not be the worst of the worst
Too small of a sample to make assumption
Only 40 funds analyzed
Analysis can not account for luck
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Good or Bad
Conclusion
Recommendation
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Pioneer funds should not be chosen for an
ORP
All ORPs should be evaluated
Best choice may be an index strategy
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Not an actively managed mutual fund strategy