Question

You are required to design an infographic/poster that would be used on financial planner’s website or displayed in their office. The purpose of the infographic/poster is to explain to investors the key similarities and differences between a small company equity fund (also called a small cap fund) and ordinary equity fund (also called a large cap fund).

The poster should be self-explanatory and contain real information. So you need to conduct additional research and you may want to compare two actual investments. For example, you may want to compare the Legg Mason Martin Currie Small Companies Fund to Legg Mason Martin Currie Core Equity Fund as there will be a guest lecture from Legg Mason coming to our class.

Answer 1

Equity Fund- Invest 90% of the corpus into equities and 10% in debt or other fixed income securities.

Difference between small cap and large cap equity fund: Are as following-

1. As the name suggest, small cap equity funds invest into the companies that have smaller size of market capitalization while large cap equity funds invest into the companies that have larger size of market capitalization.
2. Small companies have market capitalization of less than $2 Billion while large companies have market capitalization of more than $200 Billion.
3. Small cap equity funds provide lower return in short term but higher return in long term as small companies tend to grow in the future. Large cap equity funds provide higher return and good dividend as the companies are established and have good corporate governance.

Difference between Legg Mason Martin Currie Small Companies Fund and Legg Mason Martin Currie Core Equity Fund-

Legg Mason Martin Currie Small Companies Fund	Legg Mason Martin Currie Core Equity Fund
This fund invests into growing companies that are listed in Australia	This fund is a well diversified equity fund and invests into various sectors' companies in Australia
This fund invests into small companies' stock.	This fund invests into large cap stocks.
This fund has been given rating of 2 star	This fund has been given rating of 5 star.

Disclaimer: Mutual funds are subject to market risk.