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Best-Performing No Load Mutual Funds In Q3 Of 2015

It is always best to get the most out of one’s invested capital. One way of doing it is by cutting down on the expenses that investors have to bear for owning or selling mutual funds. So, buying funds that carry no sales is the best option. Sales loads are one-time fees that investors pay either at the time of purchase or when units are redeemed. The importance of sales load was all the more felt in the third quarter, when the key benchmarks posted their worst quarterly performance in four years. Just 17% of the mutual funds managed to finish in the green in the third quarter. This was a slump from 41% in the second quarter, which was again a sharp fall from 87% of the funds ending in the positive territory in the first quarter. Separately, a JPMorgan equity strategy note revealed that 67% of mutual funds underperformed their benchmarks in the third quarter. Around 34% of the funds underperformed their peers by a minimum of 250 basis points. The Dow, S&P 500 and Nasdaq declined 7.6%, 7% and 7.4%, respectively. In such torrid times, the list of best-gaining mutual funds for the quarter is dominated by no load mutual funds. Robust gains were restricted to Bear Market funds in the third quarter, and were followed by modest gains in other categories. However, the no load funds were unfazed, as they had enough representation in most of the categories. Among the top 100 performers in the third quarter, 85 funds carried no sales load. The best-performing fund in the quarter, ProFunds UltraShort Latin America Fund Inv (MUTF: UFPIX ), gained 67.1%, and needless to mention, it is a no load mutual fund. Comparative Study: No Load Funds’ Q3 Show Out of the 15,129 no load funds we studied, 2, 316 funds posted positive returns in the third quarter. The average gain for these funds came at 1.6%. Among the top 100 performers, the average gain was a significant 12.9%. This is a quite a feat for the top 100 funds that almost reached the top-performing category Bear Market’s quarterly gain of 13.1%. It was followed by Long Government and Long-Term Bond categories’ gains of respectively 4.3% and 1.7%. The disparity in gains among the categories is indicative of how tough a quarter it was for funds. The average gain for the top 100 no load funds in the second quarter was 8.9%. The average gain of the top 100 no load funds also outperformed the average 4.1% gain of the top 100 funds that carry sales load. The load-adjusted return for these funds would again bring down the 4.1% average return. Moreover, the best-performing no-load fund’s quarterly gain of 67.1% far outpaced the top-performing fund with sales load, Rydex Inverse Emerging Markets 2X Strategy Fund A (MUTF: RYWWX ), which gained 43%. RYWWX carries a maximum front-end sales load of 4.75%. (Note: These numbers include same mutual funds of varied classes) Top 15 No-Load Mutual Fund Performers Below we present the top 15 no load mutual funds with the best returns in 3Q of 2015: Fund Name Objective Description Q3 Total Return Q3% Rank vs. Obj. YTD Total Return % Yield Expense Ratio Minimum Initial Investment ($) Beta vs. S&P 500 Rydex Invr Emerging Mrkts 2X Str H Foreign 43.03 1 37.47 0 1.73 2500 -0.27 Rydex Inverse Russell 2000 2x Strat H Growth 24.5 1 8.81 0 1.82 2500 -2.4 Rydex Inverse Russell 2000 Strat H Growth 11.99 1 5.09 0 1.7 2500 -1.2 Rydex Inverse Dow 2X H Agg Growth 11.6 2 8.14 0 1.84 2500 -2.16 Rydex Inverse S&P 500 2x Str H Growth 10.24 1 5.08 0 1.77 2500 -2.02 Gabelli Comstock Capital Value AAA Flexible 10.05 1 3.3 0 2.42 1000 -0.96 Federated Prudent Bear C Growth 7.93 1 0.49 0 2.51 1500 -0.73 Rydex Inverse Mid Cap Strategy H Growth 7.86 1 2.42 0 1.65 2500 -0.97 ATAC Inflation Rotation Investor AssetAlloc 7.33 1 11.69 0.32 1.74 2500 -0.03 Arrow Managed Future Trend C AssetAlloc 7.22 1 4.09 0 2.91 5000 0.19 Rydex Govt Long Bond 1.2x Str Inv Government 6.8 1 -2.16 1.08 0.95 2500 -0.1 GAMCO Mathers Fund AAA Flexible 6.12 2 1.71 0 4.6 1000 -0.53 Fidelity Spartan Long Treas Inv Government 5.49 1 — 2.55 0.2 2500 -0.06 Goldman Sachs Managed Futures C AssetAlloc 5.46 1 12.27 0 2.26 1000 -0.07 Vanguard Long-Term Treasury Inv Government 5.44 2 0.08 2.63 0.2 3000 -0.04 Note: The list excludes the same funds with different classes, and institutional funds have been excluded. Funds having minimum initial investment above $5000 have been excluded. Q3 % Rank vs. Objective* equals the percentage the fund falls among its peers. Here, 1 being the best and 99 being the worst. The top half of this list of 15 best-performing no load mutual funds is dominated by funds that employ the short-selling or inverse strategy. Top performer, Rydex Inverse Emerging Markets 2X Strategy Fund A, seeks a return that is 200% of the inverse daily performance of the BNY Mellon Emerging Markets 50 ADR Index. RYWYX, however, now carries a Zacks Mutual Fund Rank #4 (Sell) . Similarly, the next four funds in the list, Rydex Inverse Russell 2000 2x Strat H, Rydex Inverse Russell 2000 Strat H, and Rydex Inverse Dow 2X H, Rydex Inverse S&P 500 2x Str H seek inverse returns. Funds from the Government Bond category also had a decent representation in this list of best gainers. Remember, this category was the second-best gainer among fund categories in the third quarter, according to Morningstar data. Rydex Government Long Bond 1.2x Strategy Fund Inv (MUTF: RYGBX ), Fidelity Spartan Long Term Trust Bond Index Fund Inv (MUTF: FLBIX ) and Vanguard Long Term Treasury Fund Inv (MUTF: VUSTX ) posted gains of 6.8%, 5.5% and 5.4%, respectively. Each of these three funds carries a Zacks Mutual Fund Rank #1 (Strong Buy) . Separately, ATAC Inflation Rotation Fund Inv (MUTF: ATACX ) and GAMCO Mathers Fund No Load (MUTF: MATRX ), which posted respective gains of 7.3% and 6.1%, carry a Zacks Mutual Fund Rank #3 (Hold) each. The best-performing RYWYX’s gain of over 43% was substantially higher than the second-quarter top scorer Matthews China Dividend Fund Inv ‘s (MUTF: MCDFX ) gain of 14.7%. However, while we have nine funds this time with sub 10% total return, only six had ended below 10% in the second quarter’s top performer list. Also, the lowest gain in the third quarter list of 5.4% compares unfavorably with the second quarter’s 15th-ranked Emerald Banking and Finance Fund Inv ‘s (MUTF: FFBFX ) gain of 8.2%. Original Post

Transport ETFs Modestly Up On Q3 Earnings

Unlike the second quarter, the transportation sector is headed for a solid Q3 earnings season, lagging only auto. This is especially true as total earnings from 97.8% of the sector’s total market capitalization reported are up 22.5% while revenues declined 1.2%. This is much better than Q2 earnings growth of 9.4% and revenue decline of 1.9% for the same period. Further, earnings surprises were predominantly solid with 84.6% of the companies beating earnings estimates and 30.8% beating on revenues compared with earnings and revenue beat ratios of 58.3% and 8.3%, respectively for Q2. For a better understanding, let’s dig into earnings results of some well-known industry players: Transportation Earnings in Focus The world’s largest package delivery company – United Parcel Service (NYSE: UPS ) – beat our earnings estimate by a couple of cents but revenues of $14.2 billion fell shy of our estimate of $14.35 billion. The company now expects earnings per share on the high end of the previous guidance of $5.05-$5.30 for fiscal 2015, which represents 6-12% growth on an annual basis. The Zacks Consensus Estimate at the time of earnings release was pegged at $5.27. Union Pacific (NYSE: UNP ) , the U.S. largest railroad, reported earnings of $1.50 per share outpacing the Zacks Consensus Estimate by seven cents but revenues of $5.56 billion fell short of our estimate of $5.65 billion. Other major railroads like CSX Corp. (NYSE: CSX ) and Kansas City Southern (NYSE: KSU ) also missed on revenues. At CSX, revenues lagged the Zacks Consensus Estimate by $68 million while at KSU revenues missed by $8 million. However, CSX outpaced our earnings estimate by couple of cents while KSU missed our earnings estimate by a penny. Ryder Systems (NYSE: R ) , the leader in supply chain management and fleet management services, topped the bottom line but lagged the top line. Earnings per share of $1.74 came above the Zacks Consensus Estimate of $1.72 while revenues of $1.67 billion were below our estimate of $1.72 billion. The two largest U.S. airlines – Delta Air Lines (NYSE: DAL ) and United Continental (NYSE: UAL ) – beat our earnings estimates by three cents and four cents, respectively. Revenues for Delta were slightly below the Zacks Consensus Estimate but above for United Continental (read: Highflier Airlines Earnings: Time for JETS ETF ). Last but not the least, earnings for the leading trucking carrier – J.B. Hunt (NASDAQ: JBHT ) – also came in above the Zacks Consensus Estimate by three cents and revenues were $30 million below our estimate. ETFs in Focus Despite the slew of earnings beat, many stocks have seen rough performances. As a result, the transport ETFs has been modestly up over the past 15 days. Both the iShares Dow Jones Transportation Average Fund (NYSEARCA: IYT ) and the SPDR S&P Transportation ETF (NYSEARCA: XTN ) are up 0.4% and 0.2%, respectively. Both funds have a Zacks ETF Rank of 3 or ‘Hold’ rating with a High risk outlook (see: all the Industrials ETFs here ). IYT The fund tracks the Dow Jones Transportation Average Index, giving investors exposure to a small basket of 21 securities. The fund has a certain tilt toward large cap stocks at 49% while mid and small caps account for 31% and 20% share, respectively, in the basket. The product is heavily concentrated on the top firm – FedEx (NYSE: FDX ) – at 11.9%, followed by UPS (8%), UNP (6.8%) and KSU (6.3%). From a sector perspective, air freight & logistics takes the top spot with more than one-fourth of the portfolio while trucking, airlines and railroads round off to the next three spots with double-digit exposure each. The fund has accumulated nearly $965 million in AUM while sees solid trading volume of more than 409,000 shares a day. It charges 43 bps in annual fees. XTN This fund uses an almost equal weight methodology for each security by tracking the S&P Transportation Select Industry Index. Holding 49 stocks in its basket with AUM of $270 million, each security accounts for less than 3.4% of total assets. The ETF is skewed toward small caps at 55% while the rest is evenly split between mid and large caps. About one-third of the portfolio is dominated by trucking, while airlines takes another one-fourth share. Airfreight & logistics, and railroads also make up for a double-digit allocation each. The fund charges 35 bps in fees per year from investors and trades in a moderate volume of nearly 96,000 shares a day. Link to the original post on Zacks.com

Valuation Dashboard: Healthcare – November 2015

Summary 4 key factors are reported across industries in the Healthcare sector. They give a valuation status of industries relative to their history. They give a reference for picking stocks in each industry. This article is part of a series giving a valuation dashboard by sector of companies in the S&P 500 index (NYSEARCA: SPY ). I follow up a certain number of fundamental factors for every sector, and compare them to historical averages. This article is going down at industry level in the GICS classification. It covers Healthcare. The choice of the fundamental ratios has been justified here and here . You can find in this article numbers that may be useful in a top-down approach. There is no analysis of individual stocks. A link to a list of individual stocks to consider is provided at the end. Methodology Four industry factors calculated by portfolio123 are extracted from the database: Price/Earnings (P/E), Price to sales (P/S), Price to free cash flow (P/FCF), Return on Equity (ROE). They are compared with their own historical averages “Avg”. The difference is measured in percentage for valuation ratios and in absolute for ROE, and named “D-xxx” if xxx is the factor’s name (for example D-P/E for price/earnings). The industry factors are proprietary data from the platform. The calculation aims at eliminating extreme values and size biases, which is necessary when going out of a large cap universe. These factors are not representative of capital-weighted indices. They are useful as reference values for picking stocks in an industry, not for ETF investors. Industry valuation table on 11/2/2015 The next table reports the 4 industry factors. For each factor, the next “Avg” column gives its average between January 1999 and October 2015, taken as an arbitrary reference of fair valuation. The next “D-xxx” column is the difference as explained above. So there are 3 columns for each ratio. P/E Avg D- P/E P/S Avg D- P/S P/FCF Avg D- P/FCF ROE Avg D-ROE HC Equipment&Supplies 34.5 27.18 -26.93% 4.12 3.18 -29.56% 45.64 30.51 -49.59% -20.09 -12.14 -7.95 HC Providers&Services 28.81 20.88 -37.98% 1.09 0.85 -28.24% 22.4 17.75 -26.20% 7.46 5.78 1.68 HC Technology* 56.41 56.13 -0.50% 4.11 3.39 -21.24% 32.35 35.77 9.56% -15.66 -6.2 -9.46 Biotechnology 47.8 39.78 -20.16% 50.92 29.01 -75.53% 41.33 43.74 5.51% -62.42 -64.42 2 Pharmaceuticals 32.96 26.26 -25.51% 12.28 8.25 -48.85% 29.82 32.55 8.39% -38.03 -30.3 -7.73 Life Sci. Tools&Services* 31.78 29.52 -7.66% 2.89 3.39 14.75% 32.39 27.28 -18.73% -8.87 -18.37 9.5 * Averages since 2006 Valuation The following charts give an idea of the current status of industries relative to their historical average. In all cases, the higher the better. Price/Earnings: Price/Sales: Price/Free Cash Flow: Quality Relative Momentum The next chart compares the price action of the SPDR Select Sector ETF (NYSEARCA: XLV ) with SPY (chart from freestockcharts.com). It also includes the iShares Nasdaq Biotechnology ETF (NASDAQ: IBB ) and the SPDR S&P Pharmaceuticals ETF (NYSEARCA: XPH ) as industry benchmarks. (click to enlarge) Conclusion The broad Healthcare ETF has almost the same return as SPY in the last 6 months, with large discrepancies between industries. The biotechnology index has underperformed by about 4%, the pharmaceutical index by about 14%. Two series of news have hit the latter: political announcements on overpriced legacy drugs initiated by Mrs Clinton, then suspicions of unduly inflated sales involving specialty pharmacies. Valeant Pharmaceuticals Intl (NYSE: VRX ) is at the core of both cases, but the market has punished most names linked to generic drugs and specialty pharmaceutical products. As it includes hedge fund darlings, an ETF replicating famous managers’ holdings has also suffered from this: the AlphaClone Alternative Alpha ETF ( ALFA). Taking into account valuation charts above, all healthcare industries look overpriced. There is no contradiction with the positive value score reported for Healthcare in my latest S&P 500 sector dashboard . Here, mid and small caps have been added in calculations. It is a clue of a significant discrepancy between market cap segments inside the sector. The most influential valuation factor from a statistical point of view is P/FCF, and it is more optimistic than other ratios. It points out to a slight under-pricing in 3 industries: Healthcare Technology, Biotechnology and Pharmaceuticals. However, there may be quality stocks at a reasonable price in any industry. To check them out, you can compare individual fundamental factors to the industry factors provided in the table. As an example, a list of stocks in Healthcare beating their industry factors is provided on this page . If you want to stay informed of my updates, click the “Follow” tab at the top of this article. You can choose the “real-time” option if you want to be instantly notified.