Pioneer Funds To Choose or Not to Choose An Analysis of an ORP

Introduction Purpose of Project – Evaluate returns for those participating in the ORP provider’s fund offerings Who is eligible & Risks of ORP? – Investment strategy, tax situation, style of manager – Manage own investments Temporal & Index Benchmark of Pioneer Group – 3 yr returns on S&P 500 Index

Important Aspect of Mutual Funds What is a mutual fund? – “Pool of money” Why you should invest in a mutual fund? – Diversify risk – Time and Fund Management Expertise Disadvantages of mutual funds? – Limits potential gains – Diminished returns due to commission & fees

Types of Mutual Funds Low-to-Medium Risk – Money market funds o ST securities, low rates – Fund of funds o High diversification – Index funds o Minimal trading activity – Balanced funds o Grow capital, generate income – Large cap funds o Example: Wal-Mart High Risk – Pure bonds o Keep principal until maturity – Small cap funds o IPO, no dividends – International funds o Volatility financial mkt. abroad

History of Pioneer “Pioneer Fund” founded in 1928 by Philip Carret Philip Carret – friends with WARREN Buffet – Wizard of the market – 13% average return in 55 yrs

Pioneer Today Pioneer today is owned by Uni Credito Italiano Banking Group based in Milan Pioneer Investments has 180 investors in 4 cities: Boston, Dublin, Milian, and Sinagpore Investment in the US $35 Billion Investments in the World $150 Billion Approximately 40 different funds.

Evaluation Method Three methods – Morningstar “Star” Rating 1-5 stars – Takes into account relative risk adjusted return over multiple time periods including all fees and expenses – Compare to S&P – for 3 year return – Compare to Benchmark – For 3 year return

Pioneer Star Rating

Pioneer Funds vs. Benchmarks (3 Year Returns) A = Small CompanyH = International EquityO = Mid Cap ValueV = Municipal Bond B = Global High YieldI = BalancedP = Equity IncomeW = Bond C = Mid Cap GrowthJ = Fund BQ = Tax Free IncomeX = Europe Select D = International ValueK = High YieldR = America IncomeY = Strategic Income E = Growth OpportunitiesL = ResearchS = Cash ReservesZ = Emerging Markets F = Pioneer Small Cap ValM = Growth SharesT = Real Estate G = EuropeN = ValueU = California Tax-Free Income LEGEND

Pioneer Fund Expense Ratios

Conclusion its in the results High expense ratios Under performed the S&P 500 index Under performed temporal benchmarks Low Morningstar ratings – Some non-existent Low management tenure – Recently purchased by a large banking group

Conclusion Limitations Data collected using only Morningstar and Pioneer’s websites Needs a comparison to other ORP choices – May not be the worst of the worst Results tend to support EMH – Too small of a sample to make assumption – Only 40 funds analyzed Analysis can not account for luck – Good or Bad

Conclusion Recommendation Pioneer funds should not be chosen for an ORP All ORPs should be evaluated Best choice may be an index strategy – Not an actively managed mutual fund strategy