Choose 1 stock and 1 mutual fund to comprise your retirement portfolio. 2. For each stock chosen, a comparison security (in the same industry or same mutual fund category) must be chosen (ie you...

Introduction
In order to secure the funds for retirement investment must be made during the young
age, in order to gain more returns every investor must build a diversified portfolio of his or her
own.
Diversification is a process by which unsystematic risk can be reduced. There is a very
popular phrase associated with technique “Don’t keep all your eggs in one basket”. This theory
suggests that an investor should not invest all his funds in one industry or company rather he
should invest his funds in different industries so that he can easily diversify the industry specific
risk.
'Risk cannot be eliminated but it can be minimized' this statement truly provides us a
message that risk can never be eliminated it can only be minimized. The reason being the
systematic risk, even if the proper diversification is done then only the unsystematic risk can be
eliminated and not the systematic risk. Thus we can only minimize the risk and cannot eliminate
it.
In the present case to diversify our portfolio we have chosen to invest the funds in two
different securities one is mutual funds and another is equity stock. To choose the stock and
mutual fund from the market we have done the financial analysis of both on various grounds
which are as explained in further part of this paper.
Choice of mutual fund
There are various mutual funds available in the financial market, we have analyzed them
in order to choose one of the best mutual fund among them. The three most important criteria for
choosing a mutual fund are its yield, value of net assets held and credit rating given by various
agencies. Two mutual funds under consideration are Fidelity Blue Chip Growth Fund and
Fidelity Magellan Fund.
Fidelity Blue Chip Growth Fund
The yield of this fund is 17.80% with the NAV of 49.96. The overall morning star rating
for this fund is 4 star with the 12 month high and low of $38.20 to $51.65. The net assets that are
held by the fund include $11045.48 million. The fund has the beta of 1.16, with the standard
deviation of 18.70. This company has a strong focus on investing in blue chip companies. 80%
of the assets are invested in the blue chip companies whose stocks are included in the S&P 500
or Dow Jones along with the market capitalization of minimum of $1 billion. The companies in
this fund are generally the high growth stock. The top holdings account for 29.93% which
includes Apple Inc., Google, Amazon, Qualcomm Inc., Coca cola, Philip Morris, Broadcom
Corp CL A, home Depot, Sales force.com, MasterCard Inc. This fund is considered as the
growth fund. The fund performs almost same as S&P 500.
Fidelity Magellan Fund
The YTD performance of this mutual fund is 17.74% and is listed in the category of large
growth mutual funds. Currently the performance of the stock is not adequate due to which the
overall rating of the mutual fund is 1 star. The average 12 month low high for the fund is $56.61
- $75.94. The fund’s performance is below the benchmark which is defined on the basis of the
return of S&P 500. The ratings for all investments in this fund have been rated as 1 star across all
the years because of the low return on the investment. The total net assets held by the company
are $12632.69 million. The fund is composed by different stocks, the top 10 holdings amount to
28.37% which includes Apple, Google, general electric, Exxon Mobil, Intl Bus Mach, Cheveron,
Wells Fargo, Berkshire Hathaway, Citigroup and Wal-Mart stores.
Reasons for choosing Fidelity Blue Chip Growth Fund are as follows
We have chosen to include Fidelity Blue Chip Growth fund in our portfolio due to the
following broad reasons:-
1) Credit rating of Fidelity Blue Chip Growth fund is 4star which is better than one
star credit rating of Fidelity Magellan Fund.
2) Top holding is greater in case of Fidelity Blue Chip Growth fund as compared to
Fidelity Magellan Fund.
3) Yield offered to the investors is greater in case of Fidelity Blue Chip Growth fund
as compared to Fidelity Magellan Fund.
4) Higher capital gains in case of Fidelity Blue Chip Growth fund as compared to
Fidelity Magellan Fund.
5) Better assets portfolio is being managed by Fidelity Blue Chip Growth fund as
compared to Fidelity Magellan Fund.
Choice of stock in portfolio
In the present Assignment we have selected stock of off-price apparel and home fashions
retailers for building our portfolio, the reason behind choosing this industry is its increasing
demand day by day. With increasing income and modern lifestyle the demand for the product of
the company has gone up and due to its increased demand we have decided to keep it in our
portfolio along with mutual fund chosen by us. The names of the companies under review are as
Ross stores & TJX companies Inc.
In our Portfolio we have selected to invest in Ross stores and in order to compare it with
other companies operating in same...