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3 Best-Rated Diversified Bond Mutual Funds To Consider

Mutual funds having significant exposure to diversified bonds are excellent choices for investors seeking steady returns with a relatively low level of risk. Investing in funds, which maintain a portfolio of bonds issued across a wide range of market sectors, also reduces sector-specific risk. Moreover, investing in diversified bond funds is preferred to individual bonds’ investing as building a portfolio of the second type may prove relatively more expensive. A higher level of liquidity also makes diversified bond funds more attractive. Below we share with you three best-ranked diversified bond mutual funds . Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. To view the Zacks Rank and past performance of all diversified bond mutual funds, investors can click here to see the complete list of diversified bond funds . JHancock Income C (MUTF: JSTCX ) seeks a high level of current income. JHFIX mostly invests in three types of securities. These include corporate debt securities from both developed and emerging markets, U.S. government securities and domestic high yield bonds. JHFIX may invest a maximum 10% of its assets in domestic or foreign common stocks. The JHancock Income C fund has a three-year annualized return of 1.2%. As of December 2015, JSTCX held 423 issues, with 1.2% of its total assets invested in New Zealand (Govt) 6%. PIMCO Fixed Income SHares M (MUTF: FXIMX ) may invest 100% of its assets in mortgage- and other asset-backed securities that are believed to provide a fixed level of income. These securities include commercial mortgage-backed securities, collateralized mortgage obligations and mortgage pass-through securities. The PIMCO Fixed Income SHares M fund has a three-year annualized return of 2.1%. Curtis A. Mewbourne is the fund manager of FXIMX since 2009. Columbia Strategic Income C (MUTF: CLSCX ) seeks total return that includes current income and capital appreciation. CLSCX invests in U.S. government bonds, investment grade corporate bonds, mortgage backed securities, inflation-protected securities, convertible securities as well as foreign government, sovereign and quasi-sovereign debt investments. The Columbia Strategic Income C fund has a three-year annualized return of 0.9%. As of December 2015, CLSCX held 910 issues, with 3.41% of its total assets invested in FNMA. To view the Zacks Rank and past performance of all diversified bond mutual funds, investors can click here to see the complete list of fund . By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past, but are also expected to outperform going forward. Pick the best mutual funds with the Zacks Rank. Original Post

The V20 Portfolio Week #22: Achieving 36% CAGR

The V20 portfolio is an actively managed portfolio that seeks to achieve an annualized return of 20% over the long term. If you are a long-term investor, this portfolio may be for you. You can read more about how the portfolio works, and the associated risks, here . Always do your own research before making an investment. Read the most recent update here . Note: Current allocation and planned transactions are only available to premium subscribers . It was a good week for the markets and a great one for the V20 Portfolio. Over the past week, the V20 Portfolio appreciated by 7.1% while the S&P 500 (NYSEARCA: SPY ) rose by 2.5%. It would appear that the fear in the market has subsided. With oil trending higher and job numbers remaining stable, investors have eased their apprehension about the future. The V20 Portfolio’s holdings recovered along with the market. After a little over two months, the V20 Portfolio is now up slightly for the year (+0.9%). The S&P 500 is still down by roughly 2%. Portfolio Commentary As our top holdings have rallied recently, it creates a new “problem.” Given the concentration of our top two stocks, the portfolio certainly looks “risky.” From a volatility standpoint I completely agree. A highly concentrated portfolio can experience wild swings from day to day. However, the solution to the problem can be found at the very founding philosophy of the portfolio: that price volatility does not equate to risk. One thing we do know is that if price increases faster than intrinsic value, then the stock becomes more risky over time, holding all other factors constant. For example, paying 10x earnings for 8% growth is more risky than paying 8x for the same grow rate, all else being equal. Given the recent rally, it is fair to suggest that the portfolio has become more risky (even from a value investing perspective), and I must concur. However, it is important to understand that risk is relative. When compared to the S&P 500, I firmly believe that the V20 Portfolio is still miles ahead. How can we control this risk? By selling. As price goes up, it is prudent to take some money off the table. Is next week the time to do so? Let’s take a look at one of our biggest positions, Conn’s (NASDAQ: CONN ). Since our last transaction, shares have rallied by 39%. Unfortunately, company is not growing at such a rapid pace, so it would appear that one should take some money off the table. However, I believe that now is not the time to do so, because the relationship between price and earnings yield is not linear. For example, for a stock yielding 30% to trade at 20% (a 1,000-point difference), the shares must increase by 50% (5,000 points) . Applying this principal to Conn’s, a 39% increase in price does not imply that the stock has become unattractive, only less attractive. That being said, the recent rally does imply that the theoretical future return should be lower. However, given the way the market works, very rarely will we see it unfold in the short-term exactly according to our expectation. Performance Since Inception Click to enlarge Disclosure: I am/we are long CONN, I, ACCO, DXMM, SAVE, CALL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

The Growing Disconnect Between Fundamentals And Headlines

By Francis Gannon While small-caps remain in a bear market and the world tries to gauge the condition of the global economy, we continue to focus on what we know and believe that fundamentals look better than the dire headlines suggest. Volatility in the equity markets, as measured by the Volatility Index (VIX), has subsided recently, yet the daily fitfulness of macro news remains on the upswing as the world searches for new clues in the seemingly endless debate over the condition of global economies. With the Russell 2000 Index making a fresh low in the middle of February, small-caps remain in a bear market . In fact, about 75% of Russell 2000 stocks are off more than 20% from their 52-week highs, with the median stock down 35%. So far in 2016, nine out of the small-cap index’s 10 sectors are in negative territory, with only Utilities showing a slight gain. To be sure, sentiment remains markedly negative, and investors are positioned for the worst. On the other hand, many fourth-quarter earnings reports have shown that fundamentals look better than the dire headlines suggest. This has created an environment in which expectations for stocks are low, valuations look attractive (at least to us), and corporate cash levels continue to build. Indeed, one wonders when the disconnect will resolve itself between fatalistic sentiment and headlines on the one hand and respectable-to-strong fundamentals on the other. For our part, we continue to focus on what we know and not worry about what we cannot control. In general, we have been pleased with the relative showings for a number of economically sensitive small-cap sectors. Within the Russell 2000, the Industrials sector is outperforming the index as a whole year-to-date through 2/19/16. Its down-market strength has been driven by several cyclical industries such as machinery, road and rail (in positive territory year-to-date), and transportation infrastructure. So while many investors continue to focus on economic volatility, seizing on every piece of macroeconomic or political news to gain a sense of the overall health of the global economy, we remain focused on individual companies . An old Wall Street adage says it well: “Psychology may run the market in the short term, but earnings run the market in the longer term.” Stay tuned… Disclosure: None.