Kim has invested in PB Dynamic Allocation Fund (PBDYNAF) with Public Mutual. The dynamic asset allocation strategy employed by the fund requires the fund manager to adjust the mix of asset classes to suit market conditions. This is achieved this by allocating its portfolio across blue chip stocks and growth stocks listed on the domestic and foreign markets. Kim purchased 1,000 units of PBDYNAF at a (quoted) price of $20 per unit at the beginning of the 2021. He paid a front-end load of 4%. The securities in which the fund invests are expected to increase in value by 12% during the year. The fund's expense ratio is 1.2% and the management fee is 0.7%. The fund had average daily assets of $2.2 billion at the beginning of the year and sold $400 million worth of shares and purchased $500 million shares during the year.

Required:

a.            Determine Kim’s rate of return on the fund if Kim were to sell his investment at the end of the 2021. 

b.            Calculate the turnover ratio of the fund 

c.             Calculate other administrative expenses paid by kim? 

d.            Advise Kim if the above fund is suitable for him based on his age, diversification objective and risk tolerance. (word count max: 500 words) 

Answer rating: 100% (QA)

a Kims rate of return on the fund for 2021 would be 12 12 4 ... View the full answer