Tag Archives: mutual funds

Best And Worst Q4’15: Small Cap Blend ETFs, Mutual Funds And Key Holdings

Summary The Small Cap Blend style ranks last in Q4’15. Based on an aggregation of ratings of 28 ETFs and 642 mutual funds. VB is our top-rated Small Cap Blend style ETF and PCOEX is our top-rated Small Cap Blend style mutual fund. The Small Cap Blend style ranks twelfth out of the twelve fund styles as detailed in our Q4’15 Style Ratings for ETFs and Mutual Funds report. Last quarter , the Small Cap Blend style ranked last as well. It gets our Dangerous rating, which is based on an aggregation of ratings of 28 ETFs and 642 mutual funds in the Small Cap Blend style. See a recap of our Q3’15 Style Ratings here. Figures 1 and 2 show the five best and worst-rated ETFs and mutual funds in the style. Not all Small Cap Blend style ETFs and mutual funds are created the same. The number of holdings varies widely (from 23 to 2053). This variation creates drastically different investment implications and, therefore, ratings. Investors seeking exposure to the Small Cap Blend style should buy one of the Attractive-or-better rated mutual funds from Figures 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 5 ETFs are excluded from Figure 1 because their 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 Boston Trust & Walden Funds Mid Cap Fund (MUTF: WAMFX ) and the Boston Trust & Walden Funds SMID Cap Innovations Fund (MUTF: WASMX ) are excluded from Figure 2 because their total net assets are below $100 million and do not meet our liquidity minimums. The Vanguard Small-Cap ETF (NYSEARCA: VB ) is the top-rated Small Cap Blend ETF and the Putnam Capital Opportunities Fund (MUTF: PCOEX ) is the top-rated Small Cap Blend mutual fund. VB earns a Neutral rating and PCOEX earns a Very Attractive rating. The State Street SPDR Russell 2000 Low Volatility ETF (NYSEARCA: SMLV ) is the worst-rated Small Cap Blend ETF and the ProFunds Small Cap Fund (MUTF: SLPSX ) is the worst-rated Small Cap Blend mutual fund. SMLV earns a Dangerous rating and SLPSX earns a Very Dangerous Rating. The Goodyear Tire & Rubber Company (NASDAQ: GT ) is one of our favorite stocks held by VB and earns our Very Attractive rating. Since 2010, the company has grown after-tax profits (NOPAT) by 18% compounded annually and doubled its NOPAT margin. Goodyear has also improved its return on invested capital ( ROIC ) from 5% to 9% over the same timeframe. Despite the impressive profit growth, GT remains undervalued. At its current price of $35/share, GT has a price to economic book value ( PEBV ) ratio of 1.0. This ratio means that the market expects Goodyear to never meaningfully grow NOPAT over the remaining life of the corporation. If Goodyear can grow NOPAT by 7% compounded annually for the next five years , which is well below the historic growth rate, the company is worth $49/share today – a 40% upside. Ruby Tuesday (NYSE: RT ) is one of our least favorite stocks held by Small Cap Blend ETFs and mutual funds and earns our Dangerous rating. Since 2010, Ruby Tuesday’s NOPAT has declined by 11% compounded annually while its NOPAT margins have fallen from 9% in 2010 to 3% on a trailing-twelve-month basis. Ruby Tuesday’s ROIC has followed this downward trend and is currently a bottom quintile 3%, down from 6% in 2011. To justify the current price of $5/share, Ruby Tuesday must grow NOPAT by 5% compounded annually for the next 12 years . This expectation is awfully optimistic for a business that has failed to grow profits at all over the past five years. Figures 3 and 4 show the rating landscape of all Small Cap Blend 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 Funds (click to enlarge) Sources: New Constructs, LLC and company filings D isclosure: David Trainer and Thaxston McKee receive no compensation to write about any specific stock, style, or theme.

Buy 4 Retail Funds As A Warm Up To The Black Friday Spree

Last Friday, the markets buoyed up on earnings results from certain retail primes. The Consumer Discretionary Select Sector SPDR ETF (NYSEARCA: XLY ) jumped 1.2% and was the biggest gainer among the S&P 500 components. Apart from positive results, the retail sector also has the upcoming holiday season to draw investor focus. The positives should boost retailers, translating into gains for the sector’s mutual funds as well. So, picking favorably ranked retail mutual funds will be prudent as these promise investors rich rewards this holiday season. Earnings Numbers Including releases before the opening bell on Nov. 18, 33 of the 43 retailers in the S&P 500 index have reported results. Total earnings for these retailers gained 4.4% year on year on 5.2% higher revenues. Of these companies, 57.6% beat EPS estimates and 42.4% surpassed on revenues. However, there were some robust results that came in afterward, which gave a boost to the growth numbers. Last Friday, Abercrombie & Fitch Co.’s (NYSE: ANF ) stock soared 25% after reporting quarterly adjusted earnings of 48 cents per share, significantly ahead of the Zacks Consensus Estimate of 19 cents. Moreover, earnings increased 14.3% year over year. Ross Stores Inc. (NASDAQ: ROST ) also reported better-than-anticipated top and bottom lines for the third quarter of fiscal 2015 and retained its outlook for the fourth quarter. Its shares jumped 10%. Foot Locker, Inc.’s (NYSE: FL ) shares gained 5.7% after its adjusted earnings of $1.00 per share came ahead of the Zacks Consensus Estimate of 94 cents, and jumped 20% year over year. Separately, Nike, Inc. (NYSE: NKE ) added 5.5% following its announcement of a new share repurchase program worth $12 billion, along with a hike in its dividend and a two-for-one stock split. Nike jumped to a 52-week high. Also, its weekly gain of 8.9% was the best since the week ended Sept. 26, 2014. In fact, the positive results were not a one-day event as it followed great earnings news from behemoths like Amazon.com (NASDAQ: AMZN ), Home Depot (NYSE: HD ), McDonald’s (NYSE: MCD ), BJ’s Restaurants (NASDAQ: BJRI ) and eBay Inc. (NASDAQ: EBAY ). These retail top performers have historically performed well and their stock prices have been on the rise. Upward estimate revisions based on their positive outlook should also translate into stocks moving up as the holiday season heats up. Holiday Season to be Positive Tomorrow is Thanksgiving Day. And after the turkey and prayers, America will loosen its purse strings for the year’s busiest shopping day on Black Friday. So we are on the verge of this year’s mega shopping spree, and thanks to a rebounding economy, a falling unemployment rate and improved consumer sentiment, sales should see a rise. Several factors indicate that there will be an uptrend in holiday sales this year. According to the National Retail Federation, holiday sales, excluding gasoline, restaurants and cars, will increase 3.7% on a year-over-year basis. A yearly increase of 3.7% is substantially higher than the average increase of 2.5% recorded over the last 10 years. Data compiled by eMarketer suggests a 5.7% jump in holiday sales (November and December) to $885.7 billion against 3.2% growth projected earlier. Retail e-commerce holiday season sales are anticipated to increase 13.9%, and represent approximately 9% of total sales this season (or $79.4 billion), up from 8.3% last year. Moreover, the increase in seasonal hiring by retailers, the slump in fuel prices and record wage growth are all in favor of consumers. These factors are likely to result in a strong holiday shopping season. A significant improvement in the labor market situation and lower fuel costs have increased disposable incomes. Another major factor encouraging spending this holiday season is the continued slump in fuel prices. The ability and willingness to spend should lead to jingling cash registers this time. Separately, retailers are efficiently allocating their capital toward a multi-channel growth strategy focused on improving merchandise offerings, and developing IT infrastructure to enhance web and mobile experiences of customers among others. Retail Mutual Funds in Focus Below we present 4 mutual funds from the retail sector that should be on investors’ radar now. They carry either a Zacks Mutual Fund Rank #1 (Strong Buy) or Zacks Mutual Fund Rank #2 (Buy) . 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 also on the likely future success of the fund. Putnam Global Consumer Fund A (MUTF: PGCOX ) invests in mid to large companies that are involved in the manufacture, sale or distribution of consumer staples and consumer discretionary products and services. PGCOX uses the “blend” strategy to invest in common stocks of companies. PGCOX currently carries a Zacks Mutual Fund Rank #1. PGCOX has gained, respectively, 6% and 7% in the year-to-date and 1-year periods. The 3- and 5-year annualized returns are 14.9% and 11.1%, respectively. Annual expense ratio of 1.26% is, however, higher than the category average of 1.21%. Fidelity Advisor Consumer Discretionary Fund A (MUTF: FCNAX ) seeks growth of capital. The fund invests mostly in securities issued by firms that are involved in manufacture and distribution of consumer discretionary products and services. The fund uses fundamental analysis and also looks into economic and market conditions for investment decisions. FCNAX currently carries a Zacks Mutual Fund Rank #1. The fund has gained 7% and 11.3%, respectively, over year-to-date and 1-year periods. The 3- and 5-year annualized returns are 18.6% and 15.1%, respectively. Annual expense ratio of 1.14% is lower than the category average of 1.41%. Rydex Retailing Fund A (MUTF: RYRTX ) invests most of its assets in retailers that are traded in the US and also in derivatives. RYRTX invests significantly in small to mid-sized retail companies. RYRTX currently carries a Zacks Mutual Fund Rank #2. RYRTX has lost 0.1% year to date, but is up 3.5% over the last 1-year period. The 3- and 5-year annualized returns are 14.2% and 14%, respectively. Annual expense ratio of 1.58% is, however, higher than the category average of 1.41%. Fidelity Select Retailing Portfolio (MUTF: FSRPX ) seeks growth of capital. FSRPX invests a large chunk of its assets in securities of retailing companies that are traded within the domestic boundary. These firms are involved in merchandising finished goods and services to consumers. FSRPX currently carries a Zacks Mutual Fund Rank #1. FSRPX has gained, respectively, 20.3% and 26.4% in the year-to-date and 1-year periods. The 3- and 5-year annualized returns are 25.1% and 21.3%, respectively. Annual expense ratio of 0.81% is higher than the category average of 1.41%. Original Post

4 Best-Rated Diversified Bond Mutual Funds To Invest In

Diversified bond funds provide investors with a convenient and affordable option to hold a portfolio of bonds from different economic sectors. Costs incurred to create a portfolio of individual bonds would be significantly higher than investing in this class of funds. The associated risk also declines since volatility in a specific sector has only a partial effect on the funds’ fortunes. The opportunity to reinvest the income generated and a relatively higher level of liquidity also make them a secure and attractive investment. Below we share with you 4 top-ranked diversified bond mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and we expect the funds to outperform their peers in the future. MassMutual Premier Short-Duration Bond Fund (MUTF: MSTDX ) seeks high level of total return. MSTDX maintains a diversified portfolio by investing predominantly in fixed income securities. MSTDX invests a major portion of its assets in investment grade securities. MSTDX is expected to maintain a dollar-weighted average maturity of three years or less. MSTDX may invest not more than 10% of its assets in securities below investment grade. The MassMutual Premier Short-Duration Bond Fund has returned almost 1% over the past one year. MSTDX has an expense ratio of 0.52% compared to a category average of 0.81%. DoubleLine Core Fixed Income Fund N (MUTF: DLFNX ) invests the majority of its assets in securities that are expected to provide fixed income. Around one-third of DLFNX’s assets get invested in securities, including junk bonds, bank loans and credit default swaps. The DoubleLine Core Fixed Income Fund N has returned 1.4% over the past one year. Jeffrey E. Gundlach is one of the fund managers and has managed DLFNX since 2010. Voya Intermediate Bond Fund A (MUTF: IIBAX ) seeks to provide maximum total return. IIBAX invests a major portion of its assets in investment-grade bonds, including corporate, government and mortgage bonds. The Voya Intermediate Bond Fund A returned 1.1% over the past one year. IIBAX has an expense ratio of 0.66% compared to a category average of 0.82%. RidgeWorth Seix Total Return Bond Fund A (MUTF: CBPSX ) invests a majority of its assets in fixed-income derivatives, including debt securities issued by the government and its affiliates, corporate bonds and asset-backed securities. CBPSX invests in debt securities throughout the globe, including those from emerging economies. CBPSX may invest a maximum of 20% of its assets in high-yield securities that are rated below investment grade. The RidgeWorth Seix Total Return Bond Fund A returned 0.9% in the last one-year period. As of October 2015, CBPSX held 278 issues, with 10.11% of its total assets invested in US Treasury Note 2%. Original Post