Tag Archives: zacks-mutual

Don’t Wait For Oil To Hit $20, Sell These Energy Funds

In a doomsday scenario, Goldman Sachs (NYSE: GS ) projects oil prices may nosedive all the way to $20. Financial and fundamental metrics are said to be weaker this year and a glut in global production may drag oil prices lower. While a doomsday scenario will see oil plunge to $20, the official projection for WTI in 2016 is $45, down from a prior estimate of $57. For 2017, Goldman left the projection unchanged at $60. Last Wednesday, the Energy Information Administration (EIA) reported that the US commercial crude oil inventories dropped 2.1 million barrels for the week ending Sep 11 from the previous week to 455.9 million barrels. US commercial crude oil had increased 2.6 million barrels in the week prior. This encouraging report boosted energy shares. However, these are momentary respites for the crude prices, as they may continue to remain low. For the short term, oil prices may remain muted. A radical slump may not be seen in the short term, as there’s hope that geopolitical news doesn’t act as the igniter. Bearishness will persist though, as it is unlikely that there will be a consistent sharp decline in US shale oil production. Also for oil prices to bounce sharply higher, the OPEC nations would need to cooperate with non-OPEC producers to cut production. In spite of soft pricing, U.S. shale producers and OPEC continue to produce more of the commodity for fear of losing their market share. Most importantly, when the energy market had pushed the cartel to cut output last November, it had clearly refrained from doing so. The $20 Doldrum A decade ago, Goldman projected that oil prices have entered the “super spike” period and that the price of oil would inflate to $105. This was proved right, though the prediction had sparked criticism that Goldman Sachs was marketing its commodity index fund. This time with a $20 prediction for the worst-case scenario, even those criticisms will not make sense. When crude prices were hovering significantly over $100, it must have sounded strange to predict its fall to $40 in a year. But it did happen. Goldman says that there is less than a 50% chance of oil dropping to the $20 figure. The glut or global oversupply of oil is larger than what Goldman had predicted earlier. Below $20, some U.S. shale-oil producers will not be able to recover their operating cost and will eventually be forced to stop pumping. Production Cut Most Wanted A production cut from the U.S. shale players is most needed. The International Energy Agency (IEA) is anticipating U.S. oil production to decrease by 400,000 barrels a day in 2016 as the shale players might soon slip on low crude prices. Most importantly, the declining U.S. oil production trend has already started this year. This was revealed in the short-term energy outlook of the Energy Information Administration (EIA) which provides official energy statistics from the U.S. government. Per this outlook, August oil production declined by 140,000 barrels a day from the prior month. Energy Funds to Sell For risk-averse investors who are cautious of this sector, we present 3 Energy funds below that carry either a Zacks Mutual Fund Rank #4 (Sell) or Zacks Mutual Fund Rank #5 (Strong Sell) as we expect these funds to underperform 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 minimum initial investment for these funds is within $5000. The BlackRock Energy & Resources Portfolio A (MUTF: SSGRX ) seeks capital appreciation over the long run. SSGRX invests a lion’s share of its assets in small cap companies related to sectors including energy, natural resources and utilities. SSGRX has no limit on number of companies it can invest in, but it will invest in a minimum of three countries. SSGRX currently carries a Zacks Mutual Fund Rank #4. The year-to-date and 1-year losses are 26.2% and 47.5%. The 3 and 5-year annualized losses now stand at 15.3% and 8.3%. Annual expense ratio of 1.31% is lower than the category average of 1.45%, but SSGRX carries a front end sales load of 5.25%. The BlackRock All-Cap Energy & Resources Portfolio A (MUTF: BACAX ) seeks capital appreciation over the long term. BACAX invests a majority of its assets in domestic and foreign natural resources and energy companies. BACAX may also invest in related businesses and utilities. However, a minimum of 25% of its assets must be invested in the energy sector. BACAX currently carries a Zacks Mutual Fund Rank #4. The year-to-date and 1-year losses are 24.2% and 38%. The 3 and 5-year annualized losses now stand at 9.2% and 4.6%. Annual expense ratio of 1.38% is lower than the category average of 1.45%, but SSGRX carries a front end sales load of 5.25%. The Rydex Energy Services Fund A (MUTF: RYESX ) seeks growth of capital. The fund invests a majority of its assets in equities of small to mid-cap Energy Services Companies that are domestically traded. It also invests in derivatives. The fund may also buy American Depositary Receipts for exposure to non-Us energy companies. RYESX currently carries a Zacks Mutual Fund Rank #4. The year-to-date and 1-year losses are 25.3% and 48.5%. The 3 and 5-year annualized losses now stand at 15.3% and 5%. Annual expense ratio of 1.6% is lower than the category average of 1.45%, but RYESX carries a front end sales load of 4.75%. The Ivy Global Natural Resources Fund A (MUTF: IGNAX ) seeks capital appreciation. It invests heavily in equity securities of companies across the globe, whose primary operations are related to natural resources, including suppliers and service providers. A minimum of 65% of its assets are invested in a minimum of three countries and may include domestic firms. IGNAX currently carries a Zacks Mutual Fund Rank #5. The year-to-date and 1-year losses are 14.6% and 32.2%. The 3 and 5-year annualized losses now stand at 8.1% and 4.5%. Annual expense ratio of 1.57% is higher than the category average of 1.42%, and IGNAX carries a front end sales load of 5.75%. Link to the original post on Zacks.com

Don’t Let The SEC Scare You Away From These JPM Funds

In a quarterly document filed with the Securities and Exchange Commission (SEC), JPMorgan Chase & Co. (NYSE: JPM ) provided updates on its previously disclosed investigations as well as new probes. The company disclosed a new inquiry from the SEC and other government authorities over the sale and use of proprietary products such as JPMorgan mutual funds in the company’s wealth management businesses. JPM has received subpoenas and inquiries from the SEC and other regulators investigating how the banking behemoth sells its own mutual funds and other products. The company stated in the filing that it is cooperating with the concerned authorities. The SEC Investigation The SEC’s enforcement division is investigating if JPMorgan and brokerages offered bonuses and incentives to financial advisers to convince clients to buy in-house funds, structured notes and other investments which earned the bank fees. Bloomberg had reported this in March. “The SEC is scrutinizing, among other things, how the largest U.S. bank by assets managed pensions and other accounts that hold it to a so-called fiduciary standard, which obligates it to put clients’ financial interests ahead of its own,” reported Bloomberg in March. Reportedly, the SEC is looking into if JPMorgan had breached the bank’s duties to clients and if the bank adequately disclosed its compensation and other practices to the clients. The probe into a possible conflict of interest has been running for two years, but has become active now. According to sources, the Office of the Comptroller of the Currency is assisting the probe. Wendel Investissement Investigation Separately, JPMorgan provided an update about the Wendel Investissement ( OTC:WNDLF ) investigation, which has been underway since 2012. The company stated that it received a notification last month about the initiation of a formal probe against it by French authorities. Senior managers of Wendel restructured their shareholdings during the period from 2004 through 2007, with financing for certain transactions provided by the Paris branch of JPMorgan. The French criminal authorities have been investigating this case. White House Warns of Backdoor Payments This comes at a time when the Obama administration is serious about cracking down on the unfair practices that many Wall Street firms are engaged in when they advise retirement investors. The Wall Street firms are accused of deriving benefits via backdoor payments and hidden fees. The Labor Department has announced a proposal, which would require brokers to have a legal duty to prioritize clients’ interests. The protection is believed will save $40 billion in fees over 10 years. According to the Bloomberg, “Brokers could earn sales commissions and other fees that create conflicts of interest if they sign a “best-interest” contract with investors,” said Labor Secretary Thomas Perez. JPMorgan’s Stance In a 2015 disclosure statement for endowment and foundation clients, JPMorgan stated: We prefer internally managed strategies because they generally align well with our forward-looking views and our familiarity with the investment process, as well as the risk and compliance philosophy that comes from being part of the same firm…It is important to note that J.P. Morgan receives more overall fees when internally managed strategies are included. JPMorgan’s asset-management unit has expanded though its other major banks face regulatory pressure. JPMorgan enjoyed the best percentage growth in asset inflows in the five years ending 2014. A February presentation to investors noted JPMorgan had $1.7 trillion in assets under management at the end of 2014. The asset-management unit was structured by expanding JPMorgan’s mutual fund operation. On the other hand, major banks like Morgan Stanley, Citigroup Inc. and Bank of America Corp. have trimmed their mutual fund businesses over the last 10 years, notes Bloomberg. 5 Safe JPMorgan Funds to Own Investors need not be jittery right away due to the ongoing investigations. If a JPMorgan fund has been performing well and returning handsome gains then investors may stay invested. Also, funds with low expense ratio and favorable Zacks Mutual Fund Rank should continue to be potential investment instruments. Here we will list 5 mutual funds from the JPMorgan fund family that carry 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. These funds also have encouraging 1 year and 3-year annualized returns. These funds carry no sales load and have low expense ratios. The management fee for these funds is less than 1%. The management fee is the annual percentage of fund assets paid to the fund’s investment manager as compensation for managing the fund. Often this fee is graded; that is, the percentage fee is reduced in steps on assets in excess of various breakpoints. Generally, the management fee will not exceed 1% of total net assets. JPMorgan Intrepid America R5 (MUTF: JIARX ) seeks capital appreciation over the long term. It invests a majority of its assets plus borrowings in large and mid cap domestic firms. While the mid-cap firms have market capitalization between $1 billion and $10 billion, the market cap for large cap firms are over $10 billion. JPMorgan Intrepid America R5 carries a Zacks Mutual Fund Rank #1 (Strong Buy). JIARX has returned 14.8% and 20% over the last 1 and 3-year periods. The annual expense ratio is 0.58%, lower than the category average of 1.08%. The 10-year expense projection for every $10,000 invested is $689, compared to category average of $1,641. JPMorgan Large Cap Value R5 (MUTF: JLVRX ) invests majority of its assets in large-cap companies. JLVRX invests in equities, including common stocks and also debt and preferred stocks that can be converted to common stock. These large-cap firms have market capitalization equal to the ones listed on the Russell 1000 Value Index. JPMorgan Large Cap Value R5 currently carries a Zacks Mutual Fund Rank #2 (Buy). JLVRX has returned 12.1% and 19.9% over the last 1 and 3-year periods. The annual expense ratio is 0.57%, lower than the category average of 1.13%. The 10-year expense projection for every $10,000 invested is $726, compared to category average of $1,627. JPMorgan US Equity R5 (MUTF: JUSRX ) aims to provide high total return. JUSRX invests a lion’s share of its assets in domestic companies. JUSRX mostly invests in common stocks of mid to large-cap domestic firms. It may also invest a maximum of 20% of its assets in foreign companies. JPMorgan US Equity R5 currently carries a Zacks Mutual Fund Rank #2 (Buy). JUSRX has returned 14.3% and 19.5% over the last 1 and 3-year periods. The annual expense ratio is 0.59%, lower than the category average of 1.08%. The 10-year expense projection for every $10,000 invested is $735, compared to category average of $1,641. JPMorgan Growth Advantage R5 (MUTF: JGVRX ) seeks capital appreciation. JGVRX invests mostly in companies of all market capitalizations. However, at a given time, JPMorgan Growth Advantage R5’s assets may be invested in one particular type of market capitalization. JPMorgan Growth Advantage R5 currently carries a Zacks Mutual Fund Rank #2 (Buy). JGVRX has returned 20.3% and 20.6% over the last 1 and 3-year periods. The annual expense ratio is 0.85%, lower than the category average of 1.19%. The 10-year expense projection for every $10,000 invested is $1,014, compared to category average of $1,670. JPMorgan Realty Income R5 (MUTF: JRIRX ) seeks to provide total return, offering both income and capital growth. JRIRX invests heavily in real estate investment trusts (REITs) and may purchase equity securities of small cap REITs. It may invest in equity as well as mortgage REITs. JPMorgan Realty Income R5 currently carries a Zacks Mutual Fund Rank #1 (Strong Buy). JRIRX has returned 11.5% and 9.9% over the last 1 and 3-year periods. The annual expense ratio is 0.78%, lower than the category average of 1.31%. The 10-year expense projection for every $10,000 invested is $1,114, compared to category average of $1,796. 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.

Best Performing Technology Mutual Funds Of Q1 2015

The first quarter earnings numbers for some tech bellwethers have been cheered by market participants. The tech sector is among the sectors to have the best stock price response to Q1 earnings. Nasdaq hit a record high among the flurry of earnings releases. Among the most popular stocks, Apple (NASDAQ: AAPL ) reported strong second-quarter fiscal 2015 results, wherein its earnings jumped 40.4% year over year on higher revenues from iPhone and Mac sales. Meanwhile, upbeat quarterly results from Amazon (NASDAQ: AMZN ) and Microsoft (NASDAQ: MSFT ) also helped the Nasdaq hit a record high. Meanwhile, market participants also saw Google’s (NASDAQ: GOOG ) (NASDAQ: GOOGL ) shares gaining, though it fell short of expectations. However, management was able to explain away its problems by explaining the progress on YouTube that has been an area investors have been concerned about. Separately, eBay (NASDAQ: EBAY ) reported a solid first quarter despite currency headwinds. IBM (NYSE: IBM ) too had reported better-than-expected first quarter 2015 earnings. For the tech mutual funds though, the sector’s gain was restricted to just about 3% in first quarter. This, however, is far above the 0.2% gain in the Technology Select Sector SPDR ETF (NYSEARCA: XLK ) in the first quarter. Returns from the top 15 technology funds in the first quarter are also decently above the sector’s 3% return. The highest return touched 8.6%, while the 15th ranked fund returned 4.1%. The Tech Sector as of May 7 More often than not the technology sector is likely to report above par earnings than other sectors, as the demand for technology and innovation remains high. However, technology stocks are considered to be more volatile than other sector specific stocks in the short run. In order to minimize this short-term volatility, almost all tech funds adopt a growth management style with a focus on strong fundamentals and a relatively higher investment horizon. Investors having an above par appetite for risk and fairly longer investment horizon should park their savings in these funds. On the revenues side, the best growth rate among the 16 Zacks sectors is from the Retail sector – up 11.7% year on year. Medical and Technology have the next best revenue growth rates, up 8.8% and 7.5%, respectively. The Technology sector’s total earnings improved 6.9% on 7.5% higher revenues, with 47.9% of the sector companies beating EPS and 45.8% beating revenue estimates. The sector’s respectable looking growth numbers was largely due to Apple’s strong quarterly report. The Tech Sector: Semiconductor, Cloud Computing The top 15 technology fund performers include funds from varied fund families. Moreover, the list includes funds that focus on varied sectors of the broad technology space. These funds invest in advance science and technology, Internet, and also semiconductor firms. According to the Semiconductor Industry Association (SIA), worldwide semiconductor industry recorded sales growth of 9.9% in 2014 to $335.8 billion. Also, the report indicated worldwide semiconductor sales growth of 3.4% in 2015, followed by 3.1% improvement in 2016. The industry is experiencing growth primarily due to developing end markets and new product offerings, supported by process and yield improvements by semiconductor manufacturers. Separately, the ever evolving technology sector has been witnessing a number of new trends over the past couple of years. Of these, the notable ones include Bring Your Own Device (BYOD), cloud computing, Big Data, Internet of Things (IoT), flash storage, social networking, 3-D printing and wearable devices. These technologies have brought a massive change in the IT storage industry. Last year, we saw mainstream adoption of cloud computing by enterprises. As consumers’ dependence on cloud for storage purpose increases, there will be a proportionate increase in the demand for cloud-dedicated data centers. Widespread implementation of CRM and ERP solutions, increased Internet and mobile penetration, highly growing media and regulatory compliance resulted in data explosion for enterprises. Further, according to research firm Global Industry Analysis Inc. (GIA), information is currently growing at a rate of more than 65% every year with total data generated worldwide anticipated to cross 3 million petabytes by 2020. All these have contributed to the growth of the storage industry. Top 15 Technology Mutual Funds of Q1 2015: In the table below, we present the top 15 Technology mutual funds with the best returns of Q1 2015: Note: The list excludes the same funds with different classes, and institutional funds have been excluded. Funds having minimum initial investment above $5,000 have been excluded. Q1 % Rank vs. Objective* equals the percentage the fund falls among its peers. Here, 1 being the best and 99 being the worst. Only two of the funds here, Firsthand Technology Opportunities (MUTF: TEFQX ) and Ivy Science & Technology Fund A (MUTF: WSTAX ) carry unfavorable Zacks Mutual Fund Ranks. Nine of the funds are favorably placed, with Buffalo Discovery Fund (MUTF: BUFTX ), USAA Science & Technology Fund (MUTF: USSCX ), Fidelity Select Technology (MUTF: FSPTX ) and Columbia Seligman Global Technology Fund A (MUTF: SHGTX ) carrying a Zacks Mutual Fund Rank #1 (Strong Buy). Separately, Franklin DynaTech Fund A (MUTF: FKDNX ), Fidelity Advisor Technology Fund A (MUTF: FADTX ), BlackRock Science & Technology Opportunities Portfolio A (MUTF: BGSAX ), Matthews Asia Science & Technology Fund Inv (MUTF: MATFX ) and T. Rowe Price Global Technology (MUTF: PRGTX ) carry a Zacks Mutual Fund Rank #2 (Buy). T. Rowe Price Global Technology has carried on the strong run in 2014 and over recent years. Its 3- and 5-year annualized returns now stand at 23.5% and 20.8%. Earlier this year, T. Rowe Price Global Technology was also suggested as one of the three funds that investors may buy for 2015. Original Post