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Top-Performing Energy Mutual Funds In Q1 2016

After bleeding heavily from the beginning of 2016 through early February, the energy sector made an impressive comeback to end the first quarter on a positive note, all thanks to a strong spike in oil prices. The sector’s rebound also helped energy mutual funds to end the quarter with moderate gains. According to Morningstar, the mutual fund category – Energy Equity – returned 2.2% during the first quarter, after losing nearly 10.5% in its first two months. Meanwhile, the WTI and Brent crude, which slumped 28.7% and 19.2%, respectively, since the start of 2016 to reach multi-year low levels on February 11, gained 4.3% and 6.4% during the first quarter. This was the best quarterly performance of crude since the second quarter of 2015 that came on the back of a strong rebound from February 11 through the end of the quarter, when WTI and Brent crude surged 46.3% and 31.7%, respectively. Against this backdrop, it will be worth watching the top performers from the energy equity mutual fund category in the first quarter. But before going into the discussion about the mutual funds, let’s find out the factors that impacted the movement of oil prices during the quarter. Behind the Early Slump Oil prices witnessed a massive slump since the start of 2016, following concerns including China-led global growth worries and the unwillingness of major oil producers to reduce production despite the persistent fall in oil prices. A flurry of disappointing economic data out of China – one of the major importers of oil – raised concerns that an already weak demand environment may deteriorate further following the weakness in the Chinese economy. Dismal economic data out of the major economic regions, such as the U.S., the eurozone and Japan, intensified worries regarding weak global demand. Meanwhile, the major oil producers continued to produce at high levels without considering weak global demand and an already oversupplied market. Continued increase in crude inventories also played a major role in the oil slump during the first half of the quarter. Separately, Iran, which witnessed a lift-off in sanctions on its oil export, continued to raise its production, adding to the supply glut. These were the reasons why crude prices touched 12-year low levels in early February, which in turn, dragged the major benchmarks to multi-year lows. A Remarkable Recovery Strong intentions of major oil producers to control the supply glut played a catalyst for the rebound. Ministers and officials of both OPEC and non-OPEC countries said that they will be meeting on April 17 to discuss an oil production freeze in order to boost prices. Continued decline in oil rig counts and a lower-than-expected rise in crude inventories also gave a boost to oil prices during the latter half of the first quarter. Meanwhile, improvements witnessed in the economic environment of the U.S. and China also eased concerns over weak global demand to some extent. Separately, a weaker U.S. dollar also played a significant role in increasing oil prices, as it made crude more attractive for investors trading in currencies other than the U.S. dollar. 3 Top Energy Mutual Funds In this section, we have highlighted three fundamentally strong energy mutual funds that gained the most during the first quarter, banking on a strong rebound in oil prices and the energy sector. These funds either have a Zacks Mutual Fund Rank #1 (Strong Buy) or #2 (Buy). We expect these funds to outperform their 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 also on the likely future success of the fund. Besides having impressive first quarter return, these funds also have strong three-month returns. The minimum initial investment is within $5000. Also, these funds also have low expense ratios. Vanguard Energy Fund Inv (MUTF: VGENX ) seeks growth of capital over the long run. It invests the lion’s share of its assets in securities of companies engaged in operations related to the energy sector. The fund primarily invests in common stocks of companies. Currently, VGENX carries a Zacks Mutual Fund Rank #1. The product has first-quarter and three-month returns of 7.8% and 20.3%, respectively. Its annual expense ratio of 0.37% is lower than the category average of 1.51%. BlackRock Natural Resources Trust Fund A (MUTF: MDGRX ) invests the majority of its assets in equity securities of companies having a significant portion of their assets in natural resources. It invests in securities of companies having operations related to sectors including energy, oil and gas. Currently, MDGRX carries a Zacks Mutual Fund Rank #2. The product has first-quarter and three-month returns of 3.9% and 17.7%, respectively. Its annual expense ratio of 1.10% is lower than the category average of 1.51%. Fidelity Select Energy Portfolio No Load (MUTF: FSENX ) seeks capital growth. It invests a large chunk of its assets in common stocks of companies involved in the energy sector, including oil, gas, electricity and solar power. The fund invests in securities of companies throughout the globe. Currently, FSENX carries a Zacks Mutual Fund Rank #1. The product has first-quarter and three-month returns of 3.3% and 15.8%, respectively. Its annual expense ratio of 0.79% is lower than the category average of 1.51%. Original Post

4 Top-Rated Technology Mutual Funds To Invest In

Risk lovers seeking to derive healthy return over a fairly long investment horizon may opt for technology mutual funds. It is believed that the technology sector is poised for brighter earnings performance compared to other sectors due to higher demand for technology and innovation. Though the sector is likely to experience more volatility than others in the short term, the extent of volatility is believed to decline over a longer time horizon. Meanwhile, most of the mutual funds investing in securities from these sectors opt for a growth-oriented approach that includes focusing on strong fundamentals of companies and a relatively higher investment horizon. Moreover, technology has come to have a broader meaning than just hardware and software companies. Social media and “Internet” companies are now a part of the technology landscape. Below, we will share with you four buy-rated technology mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) , as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all technology funds, investors can click here . Fidelity Select Technology Portfolio No Load (MUTF: FSPTX ) seeks capital growth over the long run. It invests a large chunk of its assets in common stocks of companies primarily involved in production, development and sale of products used for technological advancement. FSPTX invests in both US and non-US companies. Factors including financial strength and economic condition are considered before investing in a company. The fund is non-diversified and has a three-year annualized return of 14.2%. Charlie Chai is the fund manager and has managed FSPTX since 2007. MFS Technology Fund A (MUTF: MTCAX ) invests a large chunk of its assets in securities of companies involved in operations related to products and services that are believed to benefit from advancement and improvement of technology. It invests in securities issued throughout the globe, including those from emerging markets. This is a non-diversified fund and has a three-year annualized return of 15.1%. As of February 2016, MTCAX held 80 issues, with 12.28% of its assets invested in Alphabet Inc. A (NASDAQ: GOOGL ). T. Rowe Price Media And Telecommunications Fund No Load (MUTF: PRMTX ) seeks to provide long-term capital growth. It invests a major portion of its assets in securities of companies involved in operations related to media and telecommunications. PRMTX primarily invests in common stocks of large- and mid-cap companies. The fund has a three-year annualized return of 13.5%. Paul D. Greene II has been the fund manager of PRMTX since 2013. Matthews Asia Science and Technology Fund Inv (MUTF: MATFX ) invests the majority of its assets in securities of technology companies located in Asia. According to the fund’s advisors, companies that earn a maximum share of their revenue by carrying out operations related to the technology domain are considered as technology companies. MATFX primarily invests in common and preferred stocks of companies. It has a three-year annualized return of 11.6%. MATFX has an expense ratio of 1.18%, as compared to the category average of 1.45%. Original Post

The Small-Cap Premium Is Still MIA As A Buy & Hold Strategy

Yesterday’s post focused on the discouraging record for value investing over the last decade, but history looks even worse for the so-called small-cap premium in the US stock market. Yes, there have been periods when small cap shines relative to large caps, but the strategy has been a loser as a buy-and-hold proposition since 1980, based on Russell indexes. Excluding the “junk” or focusing on the “value” opportunities in the small-cap realm offers possible solutions, but the original concept using the Russell benchmarks is battered and bruised. Consider the cumulative results of the daily return spread for the Russell 2000 Index (a popular measure of US small caps) less the Russell 1000 (large caps) since the close of 1979. A dollar invested at the start of this period has faded to roughly 70 cents as of yesterday (Apr. 12, 2016). To be fair, there have been multi-year periods during the interim when small caps have outperformed large caps. But over the grand sweep of the last 35 years or so, sans timing, the small-cap concept has been a dog. Click to enlarge There are several explanations for why the small cap premium has been so elusive across the decades, although the most devastating view is that it was all a big head fake. Critics are quick to point out that the disappointing returns for small caps followed the arrival of the famous study by Rolf Banz in 1981 that put the strategy on the map and launched an industry dedicated to mining this premium. But as NYU finance professor Aswath Damodaran recently asked: “The Small Cap Premium: Where is the beef?” Arguably the best case for salvaging the strategy lies with the notion that it’s best to ignore the financially troubled firms. As I discussed last year, a recent study by Cliff Asness of AQR Capital Management and several co-authors – “Size Matters, If You Control Your Junk” – points to a fix by focusing on small companies with relatively strong financials. Nonetheless, small-cap investing as originally conceived comes with a hefty degree of empirical baggage these days. Optimists counter that the general run of disappointing small-cap performance lays the groundwork for hefty opportunities for the years ahead. Meantime, there’s another argument to counter the skeptics: small-cap value is where the real action is, as per the Fama-French research. In a future post, I’ll crunch the numbers and run a reality check on that idea. As for traditional small-cap investing a la Banz, history hasn’t been kind to the original strategy, at least when measured in the Russell indexes as a buy-and-hold setup. That doesn’t mean that the small-cap concept is dead. But some fancy footwork is required to make it work.