Dec 16 2005
ETFs Price-Fair Value Analysis
Using Morningstar's ETF price/fair value measure to evaluate the market and various sectors, Dan Culloton of Morningstar.com concludes that "as 2005 draws to a close, the song remains the same: Energy and basic-materials ETFs still look expensive, while consumer-goods and financial ETFs look undervalued." Culloton provides a detailed explanation of the price/fair value ratio, and details its application in these areas: Broad Market vs. Large Growth, Energy, Materials, Technology, Consumer Goods,Telecom, and Financial Services in this article from Morningstar via Yahoo Finance.
Dec 15 2005
Growth Funds Poised to Outperform Value Funds?
Meg Richards of the Associated Press reports that growth stocks and growth mutual funds "may be positioned for a comeback in 2006," in this article from the Grand Forks Herald. Citing Stephen Wood, portfolio strategist with Russell Investment Group, Richards said that "Professional investors and fund managers have been finding attractive opportunities in growth for months now; in fact, growth has been performing well relative to value since May. This could signal a shift in the longer-term investment cycle." Richards notes that "The Value Index still holds the lead for the year, but its advantage has narrowed to less than a percentage point."
Dec 14 2005
Chet Currier, columnist for Bloomberg News, asks "Quick, now, which investment vehicle is growing the fastest in the United States this decade? a) hedge funds; b) exchange-traded funds; c) mutual funds." The answer may surprise you, it's mutual funds. "While hedge funds and exchange-traded funds get all the plaudits as hot growth properties, neither is gaining any ground on the much bigger, supposedly mature mutual fund business. If anything, they are falling farther behind," adds Currier. More on this, detailed data, and some thoughts on the difficulties of managing mega-size mutual funds can be found in the article published here in the International Herald Tribune.
Dec 13 2005
Assessing Mutual Funds' Performance
Chuck Jaffe, CBS Marketwatch, suggests this might be a good time of year to evaluate the performance of mutual funds in your portfolio, in this article from the Seattle Times. He says, "One reason to evaluate your funds now is that there are tax benefits to selling losers before the end of the year. If you have long-term gains in the fund, however, waiting until January to make a change will postpone taxes on those gains until 2007." Jaffe also offers tips and guidelines to help funds investors develop a selling discipline.
Dec 12 2005
Hank Ezell of the Cox News Service reports that "The five biggest mutual funds available to individuals contain an astonishing $323 billion, and the total keeps growing just about every month," in this article from the Star-Telegram. Ezell adds, "...there are several winning factors," and cites Russel Kinnel, director of mutual fund research for Morningstar who said, "You will see below-average expenses, high-quality management, diversified portfolios, and, of course, a long and generally successful track record." The five largest funds include two no-load funds, Vanguard 500 Index Fund (VFINX), and the Fidelity Contrafund (FCNTX) and three load funds from American Funds (Growth Fund of America, Investment Company of America, and Washington Mutual Fund).
Dec 09 2005
International Stock Mutual Funds Bubble?
Chet Currier, columnist for Bloomberg News, makes a case for caution in international stock mutual funds investing in this article published at the Detroit News web site. Currier reports that the international category of mutual funds, comprised of broadly diversified funds, "averaged a 14.7 percent return for the 12 months ended Nov. 30. That handily beat the 10.2 percent return for domestic growth and value funds." And, he noted that single-country and regional funds outperformed by even wider margins, "with the Profunds UltraJapan fund, up 83.2 percent, and the T. Rowe Price Latin America Fund, up 70.6 percent, to the Turkish Investment Fund, up 60.5 percent, and the ING Russia Fund, up 56.2 percent." Currier also reports record new money inflows into international funds, "about a 41 percent increase from the record set last year of $106 billion."
Dec 08 2005
Global and International Mutual Funds
Bob Boulware, president and CEO of ING Funds, says "many U.S. investors do not realize to what degree foreign companies dominate some industries. For instance, eight of the ten biggest building product and metal companies are based overseas, and nine of the top 10 airlines, engineering companies and energy companies." His firm has launched a "Going Global" campaign to encourage more people to consider global and international mutual funds... "Global funds provide exposure to opportunities around the world -- both international and domestic. International mutual funds may be better suited for individuals seeking purely foreign holdings to complement their existing domestic portfolio."
Dec 07 2005
Can Small-Cap Funds Continue to Outperform?
Paul Katzeff, Investor's Business Daily, makes a case for caution in small-cap mutual fund investing. Noting that over the last five years, "19 of the top 20 U.S. diversified funds tracked by Morningstar through Dec. 5 were small caps," Katzeff reports that "some strategists advise shareholders to look at other cap sizes for better odds of future gains." More complete analysis of the small-cap cycle and other details can be found in this IBD article via Yahoo Finance.
Dec 06 2005
Lewis Braham of BusinessWeek reports on "a new breed of mutual fund... emerging known as the "absolute return" fund." Similar to hedge funds, which may invest in "currencies, commodities, distressed debt, convertible-bond arbitrage, and merger arbitrage," absolute return funds seek to earn positive returns regardless of which way the broad stock market might be moving. Braham profiles two no-load absolute return funds, the Alpha Hedged Strategies Fund (ALPHX) and the Rydex Absolute Return Strategies Fund (RYMSX) in this online article from the new isssue of the magazine.
Dec 05 2005
Separately Managed Accounts vs. Mutual Funds
With the release of Don Wilkinson's new book, "Stop Wasting Your Wealth in Mutual Funds," which touts the benefits of separately managed accounts (SMAs) over tradutional mutual funds, Chuck Jaffe, senior columnist for MarketWatch, pens a counter-point article published here at the San Francisco Chronicle's SFGate.com. He challenges Wilkinson's contention that SMAs are simply a better investment than funds, from a structure, cost and results standpoint. Jaffe concludes that "They [SMAs] are a different choice from funds, and can have very real benefits; the SMA industry needs to prove itself broadly, rather than simply ripping on the fund set."
Dec 02 2005
Equity Funds Up; Model ETF Portfolio
"U.S. equity mutual funds rose across the board in November, with growth-oriented portfolios outperforming value during the month," according to a report from Standard & Poor's in this article via Yahoo Finance. Elsewhere, Standard & Poor's reported complete November Index Returns, and in a related piece, applying indexes to exchange-traded funds (ETFs), "Standard & Poor's has come up with a model portfolio of nine exchange-traded funds," detailed in this article from BusinessWeek.
Dec 01 2005
Citing David Swenson's critically acclaimed book, "Unconventional Success," Richard Loth, a managing principal of Mentor Investing and an independent registered investment adviser, reinforces the case for index mutual funds as investment vehicles for individual investors. Loth highlights eight Vanguard index funds that, "as a whole, or as individual selections, are worth considering for a long-term investor's portfolio," including: Vanguard Balanced Index (VBINX), Vanguard Total Stock Market Index (VTSMX), Vanguard Total Bond Market Index (VBINX), Vanguard 500 Index (VFINX), Vanguard Mid-Capitalization Index (VIMSX), Vanguard Total International Stock Index (VGTSX), Vanguard European Stock Index (VEURX), and Vanguard's REIT Index (VGSIX). Details can be found in his Investing Wisely column here in the Vail Daily.
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