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Mutual Funds and Segregated Funds: A Comparison

Palombizio, Ennio A. (2007): Mutual Funds and Segregated Funds: A Comparison.

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Mutual Funds are the most common form of investment for the average household. They offer a fair amount of return for a limited amount of risk. Segregated Funds, which are, simply put, mutual funds with additional features, have grown in popularity as of late. It is something of great interest to understand the risks and returns of the fund types and better grasp the advantages and disadvantages to each. By selecting 5 mutual and segregated funds of similar investment patterns and breakdowns, and performing various statistical analyses on their prices and returns, this paper verifies which fund type would be best. VaR analysis and probability distribution modeling allows for this paper to demonstrate how to best model the results and, thus, putting forth the positives and negatives of each fund. In the end, one finds that the overall results show some inconclusiveness and calls for further study with additional factors. The differences, if any, are small and other factors, such as management/broker fees and taxes, could play a role. This paper gives important insight to what one can expect from these investment types and gives allows one to better comprehend the features of each, so that one can become a more informed and shrewd investor which can only be seen as a benefit.

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