-
Funds for Tough Times: American Century Equity Income
Tweet Share on Facebook December 16, 2008 CommentSo far this year, not a single diversified stock fund has made money. Most have gotten creamed: According to Morningstar, the average loss for funds that invest in the United States is 42 percent, and, for those that invest internationally, 50 percent. Here's a look at relatively conservative stock funds that produced positive returns during the last bear market (March 24, 2000, through Oct. 9, 2002) and have been holding up better than their peers so far this year.
American Century Equity Income (TWEIX). Companies with a history of doling out dividends are the focus at this team-managed fund. Most of the fund's assets reside in large-company stocks, which the managers scoop up on the cheap (according to valuation measures such as price-earnings ratios). The portfolio, which counts ExxonMobil, General Electric, and AT&T among its top-five stocks, also holds stakes in midsize companies and convertible bonds. The fund's long-term results are solid: Its annualized 6 percent return over the past 10 years ranks in the top 1 percent of all funds that invest in large, bargain-priced stocks.
2000-02 bear market return: 6 percent
2008 year-to-date return: -24 percent
More funds for tough times:
-
Funds for Tough Times: FAM Value
Tweet Share on Facebook December 16, 2008 CommentSo far this year, not a single diversified stock fund has made money. Most have gotten creamed: According to Morningstar, the average loss for funds that invest in the United States is 42 percent, and, for those that invest internationally, 50 percent. Here's a look at relatively conservative stock funds that produced positive returns during the last bear market (March 24, 2000, through Oct. 9, 2002) and have been holding up better than their peers so far this year.
FAM Value (FAMVX). This fund's 10-year record--a 4 percent annualized return--is better than its cousin's. Tom Putnam has steered FAM Value since its 1987 inception (comanager John Fox fame on board in 2000). Just as with Equity-Income, the managers look for quality businesses with strong balanace sheets, solid management teams, and shares that are selling at a discount. Although dividends are still important, they're less emphasized in this fund, as appreciation is the primary focus. FAM Value's top holdings include White Mountains Insurance Group and Berkshire Hathaway.
2000-02 bear market return: 8 percent
2008 year-to-date return: -32 percent
More funds for tough times:
-
Funds for Tough Times: FAM Equity-Income
Tweet Share on Facebook December 16, 2008 CommentSo far this year, not a single diversified stock fund has made money. Most have gotten creamed: According to Morningstar, the average loss for funds that invest in the United States is 42 percent, and, for those that invest internationally, 50 percent. Here's a look at relatively conservative stock funds that produced positive returns during the last bear market (March 24, 2000, through Oct. 9, 2002) and have been holding up better than their peers so far this year.
FAM Equity-Income (FAMEX). Managers Tom Putnam and Paul Hogan look for small and midsize dividend-paying companies with strong cash flow, little or no debt, and solid management teams, and they buy when shares are trading at a discount to what they think they'd be worth if they were sold or broken up. The strategy has produced respectable, although not staggering, long-term returns. Over the past decade, its average annual 3 percent gain has beaten the S&P by 4 percentage points.
2000-02 bear market return: 11 percent
2008 year-to-date return: -33 percent
More funds for tough times:
-
Funds for Tough Times: Fairholme
Tweet Share on Facebook December 16, 2008 CommentSo far this year, not a single diversified stock fund has made money. Most have gotten creamed: According to Morningstar, the average loss for funds that invest in the United States is 42 percent, and, for those that invest internationally, 50 percent. Here's a look at relatively conservative stock funds that produced positive returns during the last bear market (March 24, 2000, through Oct. 9, 2002) and have been holding up better than their peers so far this year.
Fairholme (FAIRX). Bruce Berkowitz's $6.7 billion fund may be down 33 percent so far this year, but that's still better than 92 percent of all large-company funds that invest in a blend of growth and value stocks. Berkowitz pays careful attention to a company's cash flow: He favors those with a large cash pile, which provides flexibility to fund acquisitions, increase dividends, or buy back stock. Pfizer, the triple-A rated, cash-rich pharmaceutical giant, recently occupied the fund's top spot.
2000-02 bear market return: 12 percent
2008 year-to-date return: -33 percent
More funds for tough times:
-
Funds for Tough Times: Yacktman Fund
Tweet Share on Facebook December 16, 2008 CommentSo far this year, not a single diversified stock fund has made money. Most have gotten creamed: According to Morningstar, the average loss for funds that invest in the United States is 42 percent, and, for those that invest internationally, 50 percent. Here's a look at relatively conservative stock funds that produced positive returns during the last bear market (March 24, 2000, through Oct. 9, 2002) and have been holding up better than their peers so far this year.
Yacktman and Yacktman Focused (YACKX; YAFFX). The head honcho of these funds, Donald Yacktman, likes to sift through Wall Street's bargain bin for profitable businesses selling at deep discounts. This is his kind of market. During the 2000-02 bear market, the Yacktman Fund gained 14 percent by holding cash-rich companies and keeping a quarter of its assets in greenbacks; Yacktman Focused, which holds fewer stocks, returned 12 percent during that period. Again, a hefty cash stake has helped both funds mitigate the steep losses suffered by many of their peers so far this year. You'll find big-brand names like Coca-Cola, Procter & Gamble, Microsoft, and PepsiCo in both funds.
2000-02 bear market return: 14 percent; 12 percent
2008 year-to-date return: -30 percent; -28 percent
More funds for tough times:
-
Funds for Tough Times: Mairs & Power Growth
Tweet Share on Facebook December 16, 2008 CommentSo far this year, not a single diversified stock fund has made money. Most have gotten creamed: According to Morningstar, the average loss for funds that invest in the United States is 42 percent, and, for those that invest internationally, 50 percent. Here's a look at relatively conservative stock funds that produced positive returns during the last bear market (March 24, 2000, through Oct. 9, 2002) and have been holding up better than their peers so far this year.
Mairs & Power Growth (MPGFX). The team at Mairs & Power invests in what it knows: Minnesota. Most of the $1.7 billion fund's assets are in companies based in that state, which is the fund's home base. And these aren't obscure names: Medtronic, 3M, and Target were recently among the top five holdings. Low portfolio turnover is another of the fund's hallmarks. It's an incredibly low 4 percent, which implies an average holding period of roughly 20 years for each stock. The team, which seeks steadily growing companies with solid management, has steered the fund to a 7 percentage-point lead over the S&P 500 so far this year. The fund has also outrun 95 percent of its peers, which invest in a mix of growth and value stocks.
2000-02 bear market return: 5 percent
2008 year-to-date return: -32 percent
More funds for tough times:
-
Is That an ETF in Your 401(k)?
Tweet Share on Facebook December 15, 2008 Comment (1)Exchange-traded funds haven't made a lot of headway into 401(k) plans, but Tom Lydon of ETF Trends reports on one that focuses on small businesses with less than 50 employees. It's ING Direct's ShareBuilder 401(k) plan, and it offers a menu of 16 funds and five model portfolios. The all-ETF advantage? It's a low-expense product that eliminates transaction fees, according to the head of ING Direct's 401(k) unit.
WisdomTree and iShares also offer all-ETF 401(k) plans.
-
Afternoon Buzz: Bailout Cheat Sheet
Tweet Share on Facebook December 15, 2008 Comment (1)It's tough keeping track of all the bailouts. Check out Slate's interactive cheat sheet on federal rescue packages, which includes the amount authorized, the amount spent, and a brief description of each.
Goodies from the WSJ:
Is the 401(k) system flawed?
Here's a quick guide to investing strategies for different time horizons. For example, for a medium-term timeline--2 to 5 years--one adviser says you should consider very low-cost index funds (In a market that's not likely to deliver dazzling returns, he says, do away with the risk that a real, live manager will underperform.)
Dealbook examines "Locavestors," people who invest in local businesses instead of giant conglomerates. Regional exchanges are springing up to help them do just that.
And finally, the fate of GE's coveted triple-A rating.
-
Big Investors Expect 'Robust' Rebound in 2009
Tweet Share on Facebook December 15, 2008 Comment (17)Here are the results of Citi's most recent survey of institutional (i.e. big-time) investors:
- Investors see a "fairly robust" rebound in 2009. Most expect the S&P 500 to close out the year above 1,000, and more than 40 percent of survey respondents expect it to top 1,100.
- Most investors surveyed think the recession will end in the second half of 2009, and roughly 20 percent expect it to conclude in 2010.
- Just over half think the market has already hit its bottom, although 'retests' of the lows are possible.
- Almost none surveyed see a rise in the S&P 500's earnings per share.
- Favorite sectors are financials and technology. Those expected to suffer include consumer staples, industrials, materials, and utilities.
- Investors' enthusiasm for growth stocks has eroded, "which is a bit strange considering that growth stocks generally do well in a period of broad corporate profits margin erosion," says Citi.
-
Best of the Personal-Finance Blogs: The Adult Allowance
Tweet Share on Facebook December 15, 2008 CommentHere's an idea: Get Rich Slowly makes the case for putting yourself on an adult allowance. This blogger withdrawals $200 a month to pay for things that aren't "needs," like concert tickets, Twizzlers, etc.
This is a little crazy, but entertaining: Recipes that cost $1 to $2 to make, courtesy of Early Retirement Extreme.
From Mighty Bargain Hunter, how to prepare before sitting down with a financial advisor.
And whoa. Here's someone who recently upped their 401(k) contributions to 50 percent of their salary.
