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Mutual Fund Bill Remains in Congressional Limbo
Tweet Share on Facebook September 10, 2009 Comment (5)Unveiling a new set of initiatives during his Saturday radio address, President Barack Obama made a sweeping promise to workers. "We cannot continue on this course," he said. "If you work hard and meet your responsibilities, this country is going to honor our collective responsibility to you: to ensure that you can save and secure your retirement."
[For more, see 3 Ways Obama's Saving Initiatives Will Affect Your Retirement.]
Obama's proposal, which includes a provision that would help small businesses automatically enroll employees in savings plans, comes as workers struggle to recoup losses on their recession-ravaged retirement investments. Although Obama does not need congressional approval to enact his plan, which is administrative in nature, his remarks follow on the heels of a recently renewed—although lesser-known—push on the Hill to tackle retirement savings.
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Why Small Caps Are Sizzling
Tweet Share on Facebook September 4, 2009 CommentFunds that invest in small companies typically lead the pack in a market rebound, despite the fact that they're often the hardest hit during downturns. The Aegis Value fund, which aims to buy small-cap stocks on the cheap, is currently riding the market upswing. The fund suffered deep blows in 2008, with a negative 51 percent decline, but it has risen quickly and steadily so far this year with a 61 percent return—ranking it in the top-five-performing diversified U.S. stock funds. Recently, U.S. News spoke with manager Scott Barbee about why small-company stocks bounce back quickly and what companies he likes now. Excerpts:
[See Where Bargain Investors Can Still Find a Deal.]
If small-company stocks are hit the hardest during steep market declines, why do they tend to rebound ahead of the pack?
In the latest banking crisis, we believe small-cap value stocks were hit because they were, compared to larger-cap companies, disproportionately owned by levered financial institutions and hedge funds facing margin calls and investor redemptions. In general, [small] companies are very sensitive to economic conditions. They tend to be value investments. In the down markets of 2002-2003 and 2008, those companies got crushed. When those companies came back, a big portion of their recovery had to do with the fact that these companies are economically sensitive and able to come back when the economy improved.
[Also see Funds Stage a Comeback: Time to Forgive and Forget?]
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Could China Be Right for You?
Tweet Share on Facebook September 2, 2009 Comment (1)Not sure where to invest your money right now? If you have time on your side—20-plus years or so—and you don't mind adding a riskier holding to your already diversified portfolio, you might want to consider one of the growing number of mutual funds that focus on China-based companies.
There was much said about President Obama's stimulus package here at home. Should there be one? If so, how much should the government spend? Where will the money come from? In China, there was little debate when its economy also hit a bump in the road, and, as James Oberweis, president of Oberweis Funds, recently told U.S. News, "Dictatorship certainly has its disadvantages, but the upside is you can get things done very quickly."
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Should You Deep-Six Your Mutual Fund?
Tweet Share on Facebook August 31, 2009 Comment (4)Sometimes it's just hard to let go. But although separation anxiety comes with the turf, it also pays to know when to cut an investment loose. For investors who got burned in the mutual fund market last year, this can be a hard pill to swallow now that their holdings are finally showing signs of life and the promise lingers that they can recoup losses. "Sometimes there's that tendency to want to claw your way back," says Christine Benz, Morningstar's director of personal finance. "It's kind of a psychological hurdle." With that in mind, here are some tips from Benz and other experts about when to dump a fund:
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Where Bargain Investors Can Still Find a Deal
Tweet Share on Facebook August 4, 2009 CommentBargain hunter John Buckingham of the Al Frank Fund doesn't see near as many deals in the market today versus four months ago. But there are still a few places where investors can "buy dollar bills for 50 cents," he says (Buckingham seeks cheap stocks with above-average growth potential, looking out over a three- to five-year period.) Per Buckingham, here are some names to put on your shopping list:
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Fashionable Investing: Trend-Spotting Funds Buy What's Hot
Tweet Share on Facebook July 29, 2009 Comment (1)If only you had loaded up on technology stocks in the late '90s and dumped them before the dot-com bust. Or jumped into commodities before they went gangbusters in 2007. Perhaps if you had foreseen the recent market collapse and moved all of your money into treasuries. But unless your trading abilities include psychic perception, it's not likely that you make the right calls all of the time.
Sure enough, there are funds that aim to do just that. One such is the Huntington Rotating Markets Fund, which invests in what's hot—be it a small slice of the market, like gold, or a broader category, such as large companies—and dumps (or avoids) what's not. The fund, which uses exchange-traded funds to gain exposure to a segment of the market, is currently almost fully invested in emerging markets, including Brazil, Taiwan, China, and Russia, according to manager Paul Koscik. "They're cheaper than the U.S., and if you look at growth rates, they're much higher," he says. "Investors tend to gravitate to areas of the market with great growth that they don't have to pay much for, so that's where the money goes. I think it's possible that in the next year we'll see a bubble in emerging markets."
The key, of course, is getting out before the bubble bursts.
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