Tag Archives: mutual funds

Best And Worst Q1’16: Materials ETFs, Mutual Funds And Key Holdings

The Materials sector ranks fourth out of the ten sectors as detailed in our Q1’16 Sector Ratings for ETFs and Mutual Funds report. Last quarter , the Materials sector ranked seventh. It gets our Neutral rating, which is based on aggregation of ratings of nine ETFs and 15 mutual funds in the Materials sector. See a recap of our Q4’15 Sector Ratings here . Figure 1 ranks from best to worst the eight Materials ETFs that meet our liquidity standards and Figure 2 shows the five best and worst-rated Materials mutual funds. Not all Materials sector ETFs and mutual funds are created the same. The number of holdings varies widely (from 26 to 121). This variation creates drastically different investment implications and, therefore, ratings. Investors seeking exposure to the Materials sector should buy one of the Attractive-or-better rated ETFs or mutual funds from Figures 1 and 2. Figure 1: ETFs with the Best & Worst Ratings – Top 5 Click to enlarge * Best ETFs exclude ETFs with TNAs less than $100 million for inadequate liquidity. Sources: New Constructs, LLC and company filings The Fidelity MSCI Materials Index ETF (NYSEARCA: FMAT ) is excluded from Figure 1 because its total net assets are below $100 million and do not meet our liquidity minimums. Figure 2: Mutual Funds with the Best & Worst Ratings – Top 5 Click to enlarge * Best mutual funds exclude funds with TNAs less than $100 million for inadequate liquidity. Sources: New Constructs, LLC and company filings The iShares U.S. Basic Materials ETF (NYSEARCA: IYM ) is the top-rated Materials ETF and the Fidelity Select Materials Portfolio (MUTF: FMFEX ) is the top-rated Materials mutual fund. Both earn an Attractive rating. PowerShares S&P SmallCap Materials Portfolio (NASDAQ: PSCM ) is the worst-rated Materials ETF and the Rydex Basic Materials Fund (MUTF: RYBMX ) is the worst-rated Materials mutual fund. PSCM earns a Dangerous rating and RYBMX earns a Very Dangerous rating. 161 stocks of the 3000+ we cover are classified as Materials stocks. Monsanto Company (NYSE: MON ) is one of our favorite stocks held by IYM and earns an Attractive rating. Over the past decade, Monsanto has grown after-tax profit ( NOPAT ) by 16% compounded annually. Over this same time, the company has improved its return on invested capital ( ROIC ) from 7% to 14%. Despite the long-term profitability of the company, shares remain undervalued. At its current price of $88/share, Monsanto has a price to economic book value ( PEBV ) ratio of 1.1. This ratio means the market expects Monsanto’s profits to grow by only 10% over its remaining corporate life. If Monsanto can grow NOPAT by just 5% (under a third of historical rate) compounded annually for the next decade , shares are worth $140/share today – a 59% upside. Vulcan Materials (NYSE: VMC ) is one of our least favorite stocks held by Materials ETFs and mutual funds and earns a Dangerous rating. Vulcan Materials business has yet to recover from the global recession in 2008. Since 2007, the company’s economic earnings have fallen from -$88 million to -$463 million on a trailing twelve months basis. Over this same time, its ROIC has declined from 8% to a bottom quintile 3%. Despite the deterioration of the business, the stock trades at the same prices it did prior to the recession, which leaves it significantly overvalued. To justify its current price of $82/share, Vulcan must grow profits by 14% compounded annually for the next 25 years . This expectation is awfully optimistic given that since 1998, Vulcan’s NOPAT has actually declined by 1% compounded annually. Figures 3 and 4 show the rating landscape of all Materials ETFs and mutual funds. Figure 3: Separating the Best ETFs From the Worst ETFs Click to enlarge Sources: New Constructs, LLC and company filings Figure 4: Separating the Best Mutual Funds From the Worst Mutual Funds Click to enlarge Sources: New Constructs, LLC and company filings D isclosure: David Trainer and Kyle Guske II receive no compensation to write about any specific stock, sector or theme. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.

3 Top-Rated Pacific Mutual Funds To Invest In

The Pacific Basin countries constitute one of the world’s most diverse and economically vibrant regions. Among its inherent strengths are considerable technological capabilities and a growing pool of savings. Prominent centers of production and fast growing potential markets in this part of the world also ensure that it is an exciting investment destination. With a high degree of diversification between developed and developing markets, mutual funds from this sector present a healthy mix of growth opportunities and safety for capital invested. Below we share with you 3 top-ranked Pacific Mutual Funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Matthews Asia Growth Investor (MUTF: MPACX ) seeks capital growth over the long run. MPACX invests a major portion of its assets in stocks of Asian companies. MPACX primarily focuses on acquiring common and preferred stocks of companies. MPACX may also allocate a significant portion of its assets in convertible securities of companies irrespective of their quality and maturity period. Matthews Asia Growth Investor fund has a three-year annualized return of 1.5%. As of September 2015, MPACX held 69 issues with 3.92% of its total assets invested in Orix Corp. Matthews Korea Investor (MUTF: MAKOX ) invests a large chunk of its assets in common and preferred stocks of South Korean companies. MAKOX focuses on mid- to large-cap firms, but is not restricted to them. MAKOX seeks long-term capital appreciation. The Matthews Korea Investor fund is non-diversified and has a three-year annualized return of 6.1%. MAKOX has an expense ratio of 1.11% as compared to the category average of 1.86%. Fidelity Pacific Basin (MUTF: FPBFX ) seeks long-term growth of capital. FPBFX invests a major portion of its assets in securities of issuers located in or economically tied to the Pacific Basin. FPBFX primarily focuses on acquiring common stocks of companies located across a wide range of Pacific Basin countries. Factors such as financial strength and economic conditions are considered before investing in a company. The Fidelity Pacific Basin fund has a three-year annualized return of 5%. John Dance is the fund manager of FPBFX since Oct. 2013. Original Post

Distinction Between Mutual Funds And Hedge Funds Is Eroding

The growth of liquid alternatives combined with an evolving regulatory framework is leading to a confluence between ’40 Act mutual funds and private hedge funds, according to Wulf A. Kaal, contributor to the forthcoming Elgar Handbook on Mutual Funds. In an expert from that guide, titled Confluence of Mutual Funds and Private Funds , Mr. Kaal makes the case that mutual funds are becoming more like hedge funds in terms of strategy, while hedge funds are becoming more like mutual funds in terms of regulation. In Mr. Kaal’s view, this calls into question the distinction between mutual funds and private funds. Eroding Distinctions While it’s true that mutual funds and hedge funds still occupy distinct segments of the market, employ some different strategies, serve largely different clients, and are subject to different legal rules, the gulf between the two types of funds is eroding. This is due to a combination of market forces, as retail investors seek out alternative strategies while institutions demand greater liquidity and transparency; and regulatory changes such as the Jumpstart Our Business Startups Act (the “JOBS Act”), which makes it easier for non-accredited investors to fund private, startup enterprises, including via crowdfunding. Alternative AUM Growth In terms of market forces, Mr. Kaal points out that, since 2005, alternative investments have grown twice as fast as traditional investments, in terms of assets under management (“AUM”). Although traditional investments, i.e. long-only stocks and bonds, have seen AUM grow from $37.1 trillion in 2005 to $56.7 trillion in 2013; in terms of percentages, the growth in alternative AUM from $3.2 trillion in 2005 to $7.2 trillion in 2013, is greater. While traditional investments’ AUM grew by a total of 52.8% during the period under review, alternative investments saw their AUM more than double. Rate of Growth Across Alternative Investments Mr. Kaal breaks down AUM growth across three alternative-investment structures: Alternative mutual funds Hedge funds Private equity He also lists the AUM growth for all mutual funds – i.e., mostly traditional assets – as a control group. His findings: While all four categories suffered AUM drawdowns in 2008, alternative mutual funds had by far the strongest growth in 2009, 2010, 2011, and 2012. Alternative mutual funds continued to grow in 2014, but at an abated pace. All three alternative categories showed positive AUM growth for all years, save 2008, while traditional mutual funds lost ground in 2011. Conclusion Market forces and regulatory changes are leading to a confluence between mutual and private hedge funds – but what are the implications of this confluence? Mr. Kaal lists several areas he expects will be impacted, ranging from mutual fund governance to the structure of federal securities law, and he opines that possible effects of this confluence could include “drastic immediate repercussions for market participants.” He concludes his paper by calling for continued monitoring, scholarly evaluation, and regulatory scrutiny of these developments. For more information, download the full report . Past performance does not necessarily predict future results. Jason Seagraves contributed to this article.