Aug 30 2005
Exchange-Traded Funds Branching Out
In this article from Forbes.com, Chana Schoenberger covers niche exchange-traded funds (ETFs) such as country and regional sectors, gold, biotech and real estate investment trusts, including Vanguard's European, Pacific and emerging-markets index funds, the BLDRS Europe 100 ADR, and the streetTRACKS Wilshire REIT, and interviews several industry experts who discuss some of the pros and cons of ETFs. Clifford Weber, senior vice president of the ETF Marketplace at theAmerican Stock Exchange, forecasts trading of actively managed funds on the exchange within the next year.
Aug 29 2005
Finance Professor Studies "5-Star" Funds
John F. Wasik of Bloomberg News interviews Matthew Morey, a finance professor at Pace University in New York, and author of the best seller "Blink: The Power of Thinking Without Thinking." In this article published at the Seattle Times web site, Morey, who also penned a research paper entitled "Kiss of Death: A 5-Star Morningstar Rating turns his attention to the mutual fund rating service of the well-known investment research firm saying, "Three years after a fund received its initial five-star rating, fund performance severely falls off." The professor advises focusing more on mutual fund sales costs, management expense ratios, and trading turnover.
Aug 26 2005
Exchange-Traded Funds Flourish
Meg Richards, of the Associated Press, reviews the burgeoning trend of exchange-traded funds (ETF) investing in this article from Canoe Money. She cites statistics from the Investment Company Institute that show ETF assets have grown to $242.66 billion through the second half of 2005, a 36 percent increase over the past year. Richards says that, "For bargain-minded investors, the most appealing feature of ETFs is the fact that their expense ratios are usually quite low, which can make them sometimes dramatically cheaper than their mutual fund counterparts." However, she cautions that for those investors who invest or withdraw funds incrementally, "trading fees could eliminate the cost-savings."
Aug 25 2005
No-Load Fund Profile: Janus Mercury Fund
Jonathan Burton, investments editor at MarketWatch, interviews Janus Mercury Fund manager David Corkins in this two-page article. Citing Morningstar, Burton said that, "Over the past 2 1/2 years the [Janus Mercury] fund has gained 17% annualized, topping its large-growth peers' 15% return." The fund invests in 50-70 large-cap stocks, primarily in technology, media, health-care and financial-services. Corkins said, "Growth stocks are offering pretty attractive valuations relative to the general stock market." And, he added, "Some of the best advice I ever got as a money manager was succinct: Know your companies. If you know them well, you can take advantage of the volatility."
Aug 24 2005
John F. Wasik, of Bloomberg News, interviews Tom Muldowney, managing director of Savant Capital Management in Rockford, Ill., who says you can avoid the high costs of hedge-fund investing and lower your portfolio risk by holding no-frills index funds. Muldowney says you can achieve a return of about 7.8 percent (after expenses) by holding a low-cost mix of index funds in the allocations suggested in this article from the Seatle Times.
Aug 23 2005
Economic Freedom for Better Returns?
Timothy Middleton covers an investment adviser in Charlottesville, Va., David Marotta of Marotta Asset Management, who has developed a method of using exchange-traded funds to invest in 10 of the economically freest foreign markets in the world, in this article at MNS Money. Middleton reports that Marotta's strategy has outperformed the MSCI EAFE foreign-stock index by 5.43 percentage points annually since 2002. A table of performance for the so-called "freedom portfolio" of 10 exchange-traded funds is included in the article.
Aug 22 2005
Not All S&P 500 Index Funds Are Alike
Citing a recent Investment Company Institute study, Meg Richards of The Associated Press explores why not all S&P 500 funds are alike, in this article from thestate.com, saying, "Even though their underlying holdings are practically identical, variations in asset levels, account size, minimum investment requirements and, most of all, fees, can have a significant impact your total return." Richards explains some of the differences among the Vanguard 500 Index fund (VFINX), the Fidelity Spartan 500 fund (FSMKX), and the SPDRs exchange-traded fund (SPY).
Aug 19 2005
Big Firms Battle in Small Stocks ETFs
Well, it didn't take long for competition to heat up in the micro-cap exchange-traded fund (ETF) arena. According to this two-page report from John Spence at MarketWatch, the passively managed iShares Russell Microcap Index Fund, launched just two days earlier this week has now been joined by the PowerShares Zacks Micro Cap Portfolio an exchange traded fund based on the Zacks Micro Cap Index. The Zacks Micro Cap Index is designed to identify companies from the universe of micro cap stocks with potentially superior risk-return profiles as determined by Zacks Investment Research. The Zacks Micro Cap Index is an equal-dollar weighted index comprised of 300 to 500 highest-ranking stocks selected quarterly from among the smallest 2,500 U.S. listed companies by market capitalization based on a proprietary multi-factor quantitative selection methodology.
Aug 18 2005
Large and Lagging Mutual Funds
Jonathan Clements of The Wall Street Journal provides a reality check for investors in underperforming mutual funds in this article appearing on Pittsburgh's post-gazette.com web site. Citing Morningstar, he says, "There are 126 stock funds with $1 billion or more in assets that have lagged behind their category average over the 10-year period through July 31.... These 126 funds collectively manage $438 billion, equal to 9 percent of all money invested in stock funds." As an example, he points to the Fidelity Magellan fund which has trailed the S&P 500 Index for seven of the past 10 years, and he mentions a dozen high profile mutual fund families with similar problem funds of their own.
Aug 17 2005
First Microcap Exchange-Traded Fund
The first exchange-traded fund based on an index of microcap stocks, the iShares Russell Microcap Index Fund (IWC), began trading on Tuesday on the New York Stock Exchange, according to this article from Reuters. The fund focuses on companies with market capitalizations of $50 million to $550 million. By way of bacjground, the article mentions how the ETF industry has flourished in the last two years, seeing record inflows and the launch of a flurry of new funds. Citing the Investment Company Institute, Reuters said that ETF assets rose $4.27 billion in June to $242.7 billion, and the number of funds traded rose to 171 from 163.
Aug 16 2005
Kunal Kapoor, CFA, spotlights three mutual funds which he says "have the potential for hefty capital gains payouts," in this Morningstar.com article via Yahoo Finance. Kapoor cites Cohen & Steers Realty Shares (CSRSX), among real estate funds, many of which carry potential capital gains exposure, considering the average real estate fund appreciated nearly 18 percent annually over the recent five-year period. The two other funds at the top of his "tax traps" list are the Fidelity Leveraged Company Stock fund (FLVCX) and the Nations Mid Cap Value fund (NAMAX).
Aug 15 2005
Warren Boroson, financial columnist for the Daily Record, writes about not picking good stocks, but about picking "good stock-pickers." He mentions several no-load mutual funds, including: Royce Total Return Fund, Dodge & Cox Balanced and International funds, Third Avenue Value funds, the Franklin Mutual Series funds, and three from Fidelity mutual funds, the Low-Priced Stock fund, the Leveraged fund, and the Real Estate fund, pointing out that while the S&P 500 Index has declined 2.37 percent during the past five years, the Fidelity Low-Priced Stock fund has gained 18.7 percent over the same period.
Aug 12 2005
Mutual Fund Money Flows Continue Slow Summer Trend
Mutual fund money flows, often viewed as a measure of stock market bullishness or bearishness, showed U.S. stock funds experienced a $540 reduction in new investments, $660 million, down from $1.2 billion the previous week, in the latest weekly report from TrimTabs Investment Research, according to this article by John Spence at MarketWatch. Spence reports that, "international equity funds gained $307 million,...[while] bond funds... pulled $456 million after they added $370 million the prior week."
Aug 11 2005
Two new exchange-traded funds (ETFs) tracking the growth and value stocks in the MSCI EAFE (Europe Australia Far East) index have begun trading on the New York Stock Exchange, according to this Reuters' report. The iShares MSCI EAFE Growth Index Fund and iShares MSCI EAFE Value Index Fund from Barclays Global Investors, are the first ETFs to invest in subsets of a broad international stock index.
Aug 10 2005
"Looking for a good place to put your cash? You might want to take a look at money market mutual funds," says Susan Morris of the Tribune-Review, in this article via PittsburghLIVE.com. "Financial professionals are saying that by the end of the year, these mutual funds could yield as much as 3.5 percent," she added. While this may not seem like terrific returns, income for money market mutual fund investors has basically tripled over the last two years.
Aug 09 2005
Exchange-Traded Funds for Retirement?
Evan Pondel, Contributor to The Christian Science Monitor, explores recent developments in exchange-traded fund (ETF) investing, including including their move into retirement accounts, and interviews some experts to help sort out the differences between ETFs and similar mutual funds, and compares the advantages of ETFs with the hype surrounding the popular new investment vehicles.
Aug 08 2005
John Dorfman, president of Dorfman Investments in Newton Centre, Mass., and a Bloomberg News columnist, has just released his annual list of "Master Mutual Funds," U.S. stock funds with consistently strong performance over the past year, three years, and five years periods, in this article from the Richmond Times-Dispatch. Dorfman profiles four of the top nine funds making the list which includes: American Beacon Small Cap Value Fund (AASVX), Bridgeway Ultra-Small Company Fund (BRUSX), CGM Focus Fund (CGMFX), Pacific Capital Small Cap Fund (PSCYX), RBB Schneider Small Cap Value Fund (SCMVX), RS Partners Fund (RSPFX), Small Cap Value Fund (NISVX), US Global Investors Accolade Funds, Eastern European Fund (EUROX), and Wiley Small Cap Value Fund (HWSIX).
Aug 05 2005
Newsletter Editor Picks Fidelity Funds, ETFs
Jim Lowell, the editor of Fidelity Investor and ETF Trader newsletters, spoke with senior columnist, Chuck Jaffe, about his views on mutual funds and exchange-traded funds (ETFs) in this article from MarketWatch. In the area of mutual funds, he suggests investors shoulf "buy the manager, not the fund," and considering ETFs, noted that picking the right industries, or funds with the correct take on a particular sector, is crucial to success. In his interview, which is included as an audio file in the article, Lowell discussed nine mutual funds and ETFs.
Aug 04 2005
Prospects for Foreign Mutual Funds
Judith Rehak makes a case for caution regarding international stock funds in the face of a currently stronger dollar and large returns last year, in this article from the International Herald Tribune. Rehak's report includes comments from Gareth Lyons, an analyst with Morningstar, and interviews with Jeffrey Everett, manager of the Templeton Foreign Fund, and Barnaby Weiner, manager of the MFS International Value Fund.
Aug 03 2005
Spotlight on Vanguard Large-Growth Funds
Sonya Morris, Morningstar.com, explores the prospects for a rebound in large-growth stocks, where valuations have improved dramatically since the market peak in March of 2000, in this article (from a recent issue of The Vanguard Fund Family Report, Morningstar's monthly newsletter for Vanguard investors), available now via Yahoo Financial News. Morris profiles three Vanguard growth funds: the Vanguard Morgan Growth Fund (VMRGX), the Vanguard Prime-Cap Core Fund (VPCCX), and the Vanguard Growth Index Fund (VIGRX).
Aug 02 2005
Another Simple Mutual Funds Portfolio
Thanks to Scott Burns, a columnist for the Dallas Morning News and creator of the Couch Potato Portfolio, we learn of another simple, but apparently effective mutual fund portfolio. The ''market return portfolio" is the creation of James N. Whiddon and Lance Alston, authors of the book, ''Wealth Without Worry," and financial planners at the small fee-only financial planning firm of JWA Financial Group Inc. in Dallas. They show that ..."a simple diversified index portfolio consisting of four basic index funds (20 percent S&P 500, 20 percent Russell 2000, 20 percent MSCI EAFE, and 40 percent Lehman Intermediate Government indexes) would have returned 12.70 percent a year during the 25 years from 1979 through 2004." Burns points out, in this article from the Boston Globe, that that exceeds the returns of several stalwart funds such as the Dodge and Cox Balanced Fund, the Fidelity Puritan fund, and the Vanguard Wellington fund.
Aug 01 2005
Wealthy Americans Turn to Mutual Funds
Phillip Morton, Investors Offshore.com, reports that, "New research suggests that, despite the surging popularity of alternative investments, wealthy Americans are continuing to put their faith, and money, into mutual funds. Over the past 2 years, investors worth $5 million or more have doubled the percentage of investable assets allocated to mutual funds from 6% in 2003 to 12% in 2005, according to a new study released by financial services consultancy firm, Spectrem Group." Over the same period, cash deposits increased to 13% of investable assets, from 9%, and investments in individual stocks and bonds have declined to 18% and 8%, respectively, from 20% and 10%, according to the Spectrum study.
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