Tag Archives: mutual-fund

Best Performing Mutual Funds Over The Last 1, 3 And 5 Years

Market trends so far this year has not been as robust as the previous two years. Like 2014, markets had started with a dismal January but a robust February followed close on the heels. However this time benchmarks have failed to sustain strong gains. In fact, the recent market rout is in stark contrast to the multiple highs that benchmarks kept scoring in recent years. Among other factors, China’s economic concerns and global growth worries, Greece debt negotiation, a stronger dollar and dismal earnings season for both the first and second quarter have taken the sheen away. China had shown promise of continuing the robust run before it hit a hurdle in mid-June. After strong gains, the second largest economy is showing a downtrend as government measures to prop up prices have shown temporary effect. Not only for China, but it may seem that the U.S.’s Bull Run is having to tackle many hurdles. Nonetheless, investors need not lose heart as there are many profitable investment instruments. There are a good number of mutual funds that have above 20% gains in each of the last 1, 3 and 5 year periods. Moreover, these funds also have robust year-to-date return, surpassing the broader markets’ return. The Bull Run might have helped these funds achieve the 20% plus return, but to gain significantly this year is also commendable. Before we pick these funds, let’s look at the markets’ run over these five years. We have narrowed down the funds backed by favorable Zacks Mutual Fund Ranks. Market Optimism in Last 5 Years Stepped-up economic activities, rising business and consumer confidence, record corporate profits, recovering housing fundamentals and continued job creation have injected optimism into the economy. The housing market has gathered enough strength from the lows of 2009, the labor market looks strong with the unemployment rate hitting five and a half year low. Separately, General Motors is very much back in business and Lehman Brothers emerged from bankruptcy in 2012. Annually, real GDP was always in the green since 2009. For 2010, 2011, 2012, 2013 and 2014, the economy grew at 2.5%, 1.6%, 2.3%, 2.2% and 2.4%. The US central bank has kept the rates at record low for a prolonged period. Lower rates reduce borrowing costs for households, corporate and financial institutions. This encourages borrowing and thereby economic activity. Moreover, the central bank carried three quantitative easing programs to spur the economy. The Fed announced in Oct 2014 the end of its bond-buying stimulus program. The quantitative easing program was started during the 2008 recession in order to stimulate jobs growth. During 2013, the third round of monetary stimulus plan announced the central bank would repurchase $85 billion worth of mortgage and treasury bonds. The QE programs were one of the key factors driving markets up. Keep reading our Mutual Fund Commentary section to find out the worst performing funds over 10 years in our next article. Markets in 2015 The year 2015 has definitely not been an impressive one so far. Losses in January was followed by gains in Feb and then ended in the red again in March. Though markets managed small gains in April and May, they were back to the negative zone in June. Focusing on June particularly, the losses for Dow and S&P 500 were the largest since January. The first half performance of mutual funds cannot be termed as very strong. Only four of the mutual fund categories could post above 10% gain in the first half. Just 41% of mutual funds could manage to finish in the green in the second quarter. This is less than half of the 81% gains scored by mutual funds in the first quarter. In the first half of 2015, fund inflow slumped 36% year over year to $143 billion. This significant decline was largely due to the dismal trend in the second quarter; wherein inflows were down to $41 billion through Jun 17, comparing unfavorably with the $102 billion of inflows in the first quarter. Presently, China’s concerns have merged with other headwinds to lead to global market rout. Last Friday, the Dow Jones Industrial Average slumped over 530 points and over 580 points on Monday. The rout was not solitary to the US markets on Friday. On the other side of the Atlantic, the FTSE 100 hit its lowest level this year. Germany’s DAX was down nearly 16% from record highs reached in April. Separately, Japan’s Nikkei slumped roughly 3% to six-week lows. Meanwhile in Australia, the benchmarks are suffering their worst month since the financial crisis in 2008. Funds with Highest Average Returns Let’s now look into funds that have had the best 3 and 5 year annualized gains and also over the year-to-date and 1-year periods. The year-to-date robust gains prove that these funds were not only strong gainers during the Bull Run, but they have tackled the concerns in 2015 as well. We have narrowed down our search to present 5 funds with the highest gains over these periods using simple average calculation. However, the list is dominated by healthcare funds. They carry either a Zacks Mutual Fund Rank #1 (Strong Buy) or Zacks Mutual Fund Rank #2 (Buy) as we expect the funds to outperform its peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but the likely future success of the fund. The Fidelity Select Biotechnology Portfolio (MUTF: FBIOX ) seeks capital appreciation. FBIOX invests a large share of its assets in companies primarily involved in research, development, manufacture, and distribution of various biotechnological products. Factors such as financial strength and economic condition are considered to invest in companies located all over the world. FBIOX currently carries a Zacks Mutual Fund Rank #1. FBIOX boasts year-to-date return of 8.8% and has returned 27.5% over the past 1 year. The 3 and 5 year annualized gains stand at 35.4% and 35.8%. The annual expense ratio of 0.74% is lower than category average of 1.35%. The Janus Global Life Sciences Fund (MUTF: JAGLX ) seeks capital appreciation over the long run. JAGLX invests a large chunk of its net assets in companies from the healthcare sector. JAGLX invests a minimum of 25% of its assets in companies from “life sciences” sector. JAGLX currently carries a Zacks Mutual Fund Rank #2. JAGLX boasts year-to-date return of 9.5% and has returned over 24% over the past 1 year. The 3 and 5 year annualized gains stand at 34.1% and 28.9%. The annual expense ratio of 0.92% is lower than category average of 1.35%. The T. Rowe Price Health Sciences Fund (MUTF: PRHSX ) invests a lion’s share of its net assets in common stocks of companies engaged in the research, development, production, or distribution of products or services related to health care, medicine, or the life sciences. PRHSX may invest in companies of any size, the majority of fund assets are invested in large and mid capitalization companies. PRHSX currently carries a Zacks Mutual Fund Rank #2. PRHSX boasts year-to-date return of 10.3% and has returned 25.1% over the past 1 year. The 3 and 5 year annualized gains stand at 31.3% and 31.7%. The annual expense ratio of 0.77% is lower than category average of 1.35%. Fidelity Select Health Care Portfolio (MUTF: FSPHX ) seeks capital growth over the long run. FSPHX invests a lion’s share of its assets in companies involved in designing, manufacturing and selling of healthcare products and services. FSPHX invests in companies throughout the globe. FSPHX currently carries a Zacks Mutual Fund Rank #1. FSPHX boasts year-to-date return of 3.5% and has returned over 14.3% over the past 1 year. The 3 and 5 year annualized gains stand at 30.9% and 28.2%. The annual expense ratio of 0.74% is lower than category average of 1.35%. Fidelity Select Retailing Portfolio (MUTF: FSRPX ) invests a minimum of 80% of its assets in securities of firms involved in merchandising finished goods and services to consumers. FSRPX currently carries a Zacks Mutual Fund Rank #2. FSRPX boasts year-to-date return of 5.1% and has returned 15.9% over the past 1 year. The 3 and 5 year annualized gains stand at 20.3% and 22.9%. The annual expense ratio of 0.81% is lower than category average of 1.46%. Link to the original article on Zacks.com

You Hedged Like We Suggested… Now What?

In my last article I said unless we could rally this summer we’d be in for tough times. I cited the sectors our firm was selling. And provided, for your due diligence, a suggestion for hedging with ETFs. Where does that lead us today? In my last article (August 12,) I wrote “Indeed, unless we can mount a rally in the next six to eight weeks, it may be a long cold winter that follows this long hot summer before we can get back to moving forward.” Those words may seem prophetic now but they were really nothing but common sense. When a plant grows bushy and full, it usually means it is healthy. When it grows straight and willowy, it usually indicates a problem of some sort. It’s the same with markets. As long as all sectors are moving along – at different speeds, of course, but still moving in the same direction – then things are likely to continue in that direction. But when some 20% of all stocks in the S&P 500 are down 10% or more, and most others are flat to a little down or a bit up, trouble is brewing. Yes, Apple, Amazon, Google and Netflix were still roaring ahead providing, because of their large market cap, an inaccurate picture of “the markets.” As a result of this dichotomy I wrote, “We’re reallocating our portfolio strategy to reflect what we believe to be the likelihood of a dull market that vacillates between heightened expectations and dashed expectations. That means lightening up on developing markets, energy, industrials, materials, utilities and even some technology firms.” That meant pretty much everything! I advocated buying a couple unique situations as well as “shares of ProShares UltraShort S&P 500 (NYSEARCA: SDS ), which moves inverse to the S&P 500 at double the rate of movement, as well as shares of the iPath S&P 500 VIX (NYSEARCA: VXX ), which is a reflection of the volatility I imagine we’ll be seeing more of in the coming weeks and months.” Via client and subscriber e-mail, we’ve since added shares of AdvisorShares Ranger Equity Bear ETF (NYSEARCA: HDGE ) to this mix. But our best purchase decision of 2 weeks ago was not as a hedge for our long positions but as an outright short on hubris and autocracy, shares of Direxion CSI 300 China A Shares (NYSEARCA: CHAD ). CHAD is an unleveraged short on the 300 largest and most liquid Chinese A Share companies. All of these hedges served their purpose, with VXX up more than 17% on Monday, August 24th, and CHAD up greater than 12% that day. What to do now? I wish I could tell you that we are covering or placing trailing stops under these marvelous hedges, taking our profits, and beginning to reinvest in fine, now cheap, companies. But I cannot. We are in fact using any bounces – and they will come; no market goes straight up or straight down – to sell. We’re doing so even if it means taking small losses on the long side. I simply don’t see a catalyst that will make this week-long crash a distant memory with the market marching inexorably higher. I see such a hope as unsustainable in the real world, the real world consisting of a collapsing Chinese economy (about which we have warned in numerous previous articles;) a Russia unable to sell its only “product” for more than it costs to produce it; an Iran bloated with the gift of tens of billions of dollars with which to foment terror; Brazil; a dithering Fed; Greece; and on and on. If you are thinking of buying something on any bounce, may I suggest that the above VXX, HDGE, SDS and CHAD might be fine choices to serve as a hedge for any long positions you choose to keep. And I do think you should keep some long positions. For us, the washed-out Big Energy firms are now looking very attractive, for instance. I’m not advocating selling everything. Indeed, I have written puts in our family and some client accounts on Apple. If it never gets put to us, we’ll enjoy the free money from those who think it will crash severely. And if it is put to us, I’m OK owning Apple at 10 times trailing, understated, earnings. We’re also adding to our energy exposure during this selloff – Royal Dutch Shell (RDS-B) for 12 times earnings and a 5.5% yield? I’m OK with waiting for it to recover. No fancy algorithms, no Fibonacci technicals, nothing complicated. Just good old-fashioned stock-picking with a very large hedged position, under which we’ll place trailing stops in what I hope will be the not too distant future. And, at this rate (not that I expect it to continue at this rate!) a full-blown bear market of a 20% or greater decline could be on us by mid-September! While we take a certain pride in having advised exiting most long sectors just 12 days ago and instead buying the short hedges above, the market will always make fools of those who rest on their laurels. We remain keenly focused on each day’s market action and look forward to responding to the best of our ability, come what may… _________________ Disclaimer: As Registered Investment Advisors, we believe it is essential to advise that we do not know your personal financial situation, so the information contained in this communiqué represents the opinions of the staff of Stanford Wealth Management, and should not be construed as “personalized” investment advice. Past performance is no guarantee of future results, rather an obvious statement but clearly too often unheeded judging by the number of investors who buy the current #1 mutual fund one year only to watch it plummet the following year. We encourage you to do your own due diligence on issues we discuss to see if they might be of value in your own investing. We take our responsibility to offer intelligent commentary seriously, but it should not be assumed that investing in any securities we are investing in will always be profitable. We do our best to get it right, and we “eat our own cooking,” but we could be wrong, hence our full disclosure as to whether we own or are buying the investments we write about. Disclosure: I am/we are long VXX, CHAD, SDS, HDGE. (More…) 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 iShares Exponential Technology ETF Dilutes Exposure With Blue Chips

Summary XT invests in companies developing or using exponential technologies. XT owns many large companies that only have a small exposure to these technologies. Due to blue chip holdings, XT is not as volatile as one might expect from the name, good for conservative investors, but may disappoint those seeking pure plays. The iShares Exponential Technology ETF (NYSEARCA: XT ) seeks to replicate the overall performance, before fees, of the benchmark Morningstar Exponential Technologies Index. This index is comprised of stocks issued by developed and emerging market companies that create and use exponential technologies. Exponential technologies are those which lead to exponential growth, creating entirely new markets where none existed only years before. Most of the companies in this fund use rather than create exponential technologies, which are much rarer. Take a company such as Netflix (NASDAQ: NFLX ), the top holding with 1.22 percent of assets. Netflix uses Internet technology and is riding a wave of technological change, but Netflix didn’t create the technology behind it. Index & Strategy Following the underlying benchmark, XT invests in developed and emerging market companies involved in nine different fields, or themes, which fund managers deem to be “exponential technologies.” These innovative technologies are replacing outdated systems and methodologies. The areas include big data and analytics, bioinformatics, energy and environmental systems, financial services innovation, medicine and neuroscience as well as nanotechnology, networking, robotics and 3-D printing. XT invests at least 80 percent of its assets in securities found in the underlying index. While the fund provides solid exposure to up-and-coming technology companies, such as Illumina (NASDAQ: ILMN ), Splunk (NASDAQ: SPLK ) and Hologic (NASDAQ: HOLX ), it also holds well-established blue chip companies like Airbus (OTCPK: EADSY ), AT&T (NYSE: T ), Boeing (NYSE: BA ), DuPont (NYSE: DD ), Monsanto (NYSE: MON ) and Pfizer (NYSE: PFE ). Those latter firms are unlikely to experience exponential stock price increases because they’re already large blue chip companies. The former firms are more dynamic pure plays on emerging technologies. Illumina develops, manufactures and markets integrated systems that serve the gene expression, sequencing and genotyping industry. Splunk creates software that searches, monitors and analyzes machine-generated big data. Top 10 holding Hologic develops and supplies diagnostic imaging systems related to women’s health. The mix of holdings in XT offers investors the opportunity diversify their portfolios with growth stocks across a wide range of technologies, market caps and geographic locations, but without taking on as much risk as one might expect (and for aggressive investors, want) from a fund with the name “exponential technology.” Index components are scored across individual analysts, sectors and themes. Managers review the scores and collectively select leading candidates for inclusion in the index. Each theme will have one to five leaders. The index is reconstituted annually. At that time, potential candidates for inclusion must have average 3-month trailing daily trading volume in excess of $2 million and a market cap of more than $300 million. Stocks already in the index must have maintained an average 3-month trading volume over $1.5 million and a market cap greater than $200 million. Stocks not meeting these criteria are eliminated from consideration. The remaining qualified candidates are ranked in order of their exposure to exponential technology themes. Managers rank the stocks using specific criteria, such as the number of themes in which the stock is a leader. They also consider the number of themes in which it scores above average and market capitalization with a preference for smaller firms over shares of larger cap names. The 200 highest scoring stocks are included in the index. The ETF’s managers then select and equally weight shares from this index to create the fund’s portfolio. Thus, while XT is technically not an actively managed fund, the selection of components is made by somewhat subjective measures. Portfolio Composition and Holdings XT is a large core growth fund with slightly more than $686 million in assets allocated across 195 individual holdings. The portfolio holds 67 percent of asset in domestic stocks and 31 percent in foreign shares. The fund’s foreign exposure includes Developed and Emerging Europe as well as Developed and Emerging Asia. In addition to the United States, the fund is invested in companies headquartered in the United Kingdom, France, Switzerland and Denmark as well as Canada, Japan, Australia and India. XT holds 27 percent of assets in giant cap stocks along with 40 percent in large caps, 28 percent in mid-cap stocks and 5 percent in small caps. The fund also has a small exposure to micro-cap shares. Compared to the category averages, the ETF is underweight giant caps and overweight large- and mid-cap stocks. XT is heavily weighted towards the technology, health care and telecommunication sectors. The fund’s top 10 holdings comprise 7.9 percent of total assets. These include Netflix , Valeant Pharmaceuticals (NYSE: VRX ), Amazon (NASDAQ: AMZN ), and Seattle Genetics (NASDAQ: SGEN ). While there are many large caps in the portfolio, XT has an average market capitalization of $23.3 billion, which is less than the technology category averages of $40.8 billion. XT shares have a P/E ratio of 20.94 and a price-to-book 2.72. Historical Performance Established in March 2015, XT has generated a 3-month return of 0.26 percent. This compares to the category average of -2.26 percent over the same period. XT has underperformed the Technology Select Sector SPDR ETF (NYSEARCA: XLK ) since inception in March 2015. (click to enlarge) Expenses The fund has a total expense ratio of 0.47 percent, which is less than the category average of 0.57 percent. Dividends Thanks to owning many large blue chips, the fund does pay a dividend. The current 30-day SEC yield is 1.36 percent. Outlook The iShares Exponential Technology Fund provides investors with the opportunity to gain exposure to a niche area of the thriving technology sector. XT is a relatively conservative way to play these companies due to the inclusion of blue chip companies across a range of sectors. Although the fund is equally weighted, its smaller cap components should experience larger gains over the long run. The approach of XT is good for conservative investors if it is successful, but may disappoint aggressive investors looking for pure exposure to innovative, cutting-edge technology companies. Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.