Ploax Case Study

The main goal of PLOAX is to provide long-term capital appreciation to its investors. This fund invest mainly in stock that is almost entirely in small-cap companies. Small-cap stock tends to be more volatile so this stock has an unusually high turnover rate resulting in higher fees. PLOAX has an expense fee of 1.2%, which is below the average, PLOAX is also a up front loaded fund with a sales fee of 5.5%, which is average for this type of fund. The type of stocks PLOAX invested in usually consist of common, preferred or ADR’s. PLOAX almost exclusively buys only US stock with 99% of its holding being in US stock. While PLOAX deals in both value and growth stocks, the fund tends to heavily favor growth stock over value stock. PLOAX has a lot of risk, mainly due to the fact that it is made up of mostly small-cap growth stocks and the higher volatility that goes with these stock. POLAX is not FDIC insured making the investor liable for almost all the risk and loss of value. Despite its high risk and fees, the fund has had higher than expected returns over its life. Over a ten year period, PLOAX has beaten the S&P 500 which is exactly what you want to hear when dealing with a more risky mutual fund. …show more content…
Over the span of 9 weeks PLOAX has increased in value by almost 6.3%. Despite PLOAX good performance it was not able to beat the S&P 500 Which had a return of 7% o over the same time period. Like PLOAX the S&P 500 only had one week with a negative return. I believe S&P 500 came out ahead mainly due to PLOAX tending to be more volatile and have more varying degree of positive and negative return. It seems in general there was a general upturn the US stock