Asset Classes
Essay Preview: Asset Classes
Report this essay
Asset Classes
Mutual funds and the companies listed in the Dow 30 all fall under a specific type of asset classes we all need to know about. Once we have determined the type of investor we are, we can then determine what fits our needs in terms of investments and what kind of benefits we are seeking in return. The mutual funds and companies listed under the Dow 30 all fits the investor one way or the other and in the following, I will determine the asset classes for my selected mutual fund and Dow 30 organization. I will also explain how their classifications and the current investment environment impacts organizational decisions concerning the composition of its portfolio.
Northern Funds – Mutual Funds Company
Northern Trust Corporation is a leading provider of investment management, asset, and fund administration, fiduciary and banking solutions for corporations, institutions, and affluent individuals worldwide (Northern Trust, 2006). Northern Trust, a multibank holding company is based in Chicago and has a network of 84 offices in 18 U.S states and has international offices in 12 locations in North America, Europe, and the Asia-Pacific region. As of June 30, 2006, Northern Trust has $53 billion in banking assets, $3.2 trillion in assets under custody, and $640 billion in assets under management. Northern Funds offers its customers all three asset classes of mutual funds and they are equity funds, fixed-income funds, and money-market market funds. Equity funds are defined as a mutual fund that invests in a broad, well-diversified group of stocks. Fixed-income funds are funds that invest primarily in government and corporate debt. While fund holdings may appreciated in value, the primary objective of these funds is to provide a steady cashflow to investors (Investopedia, 2006). These fixed-income funds are geared towards the conservative and retirees. Money market funds consist of short-term debt instruments, mostly in the form of Treasury bills.
As with choosing mutual funds and the type of asset classes they fall under, along comes with how classifications and the current investment environment impact organizational decisions regarding the composition of its portfolios. According to an article on the Northern Funds website, they state that their money market funds offer a very competitive rate of return after 17 quarter point rate hikes by the Federal Reserve. They continue to state that the investment in the money market funds may be the safest aspect due to investors fretting over a mild uptick in inflation and modest slowdown in growth. With taxable money market funds yielding 4.4 percent in June, cash is returning almost 1 percentage point more than inflation. That amount could climb even higher if consumer prices level off and the economy slows as expected later this year (Northern Funds, 2006).
General Motors, A Dow 30 Organization
General Motors Corporation is the worlds largest automaker and has been the global industry sales leader for past 75 years. The company was founded in 1908 and currently employs about 327,000 people around the world. With headquarters in Detroit, MI, GM manufactures its cars and trucks in 33 countries worldwide. GM also operates one of the worlds leading financing companies, GMAC Financial Services, which offers automotive, residential, and commercial financing and insurance (GM, 2006).
One of the Dow 30 organization, General Motors Corporation offers its investors stocks. Stocks are defined as a type of security that signifies ownership in a corporation and represents a claim on part of the corporations assets and earnings (Investopedia, 2006). Stocks come in two forms and they are common and preferred. Common stock enables the shareholder the right to vote during shareholders meetings and they are entitled to receive dividends. Preferred stocks do no have voting rights but it has a higher claim on assets and earnings.