1. 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%. a. If you hold both investments for 2 years, which one is the better investment? b. 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?

Question
1. 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%.
a. If you hold both investments for 2 years, which one is the better investment?
b. 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?

Image Transcription

1. 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%. a. If you hold both investments for 2 years, which one is the better investment? b. 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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