Finance ***don’t use excel to solve*** PIMCO Equity Fund has a 3% load. Annual fees are 0.35%, and the expected average annual return for the next 7 years is 11% annually. Vanguard Equity Fund is a no-load fund. Its expected average return for the next 7 years is 10% with annual fees of 1.1%.   If you hold both investments for 2 years, which one is the better investment? You believe PIMCO is a better long-term investment. How long must you hold the PIMCO Fund to achieve higher average annual returns than an investment in Vanguard?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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PIMCO Equity Fund has a 3% load. Annual fees are 0.35%, and the expected average annual return for the next 7 years is 11% annually. Vanguard Equity Fund is a no-load fund. Its expected average return for the next 7 years is 10% with annual fees of 1.1%.

 

  1. If you hold both investments for 2 years, which one is the better investment?
  2. You believe PIMCO is a better long-term investment. How long must you hold the PIMCO Fund to achieve higher average annual returns than an investment in Vanguard?
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