Tag Archives: stocks

3 Utility Mutual Funds For Steady Returns Amid Volatility

These are trying times for the markets, with most of the benchmarks striving to finish their trading days in the green and the mutual funds are not being spared either. While most of the sectors have been failing to attract investors’ attentions since the start of this year, the safe-haven appeal of the utility sector has bucked the trend to some extent. So buying utility mutual funds with strong fundamentals could help investors avoid this negative tone in a less risky manner. According to Lipper, net outflows for all equity funds came in at around $12 billion for the week ending Jan 6, indicating the market downturn. As a result, the demand for safe haven securities – such as those from the utility sector – is growing among investors. The broader S&P 500 utility sector – the Utilities Select Sector SPDR ETF (NYSEARCA: XLU ) – has attracted nearly $294.6 million of net inflow so far this year. Though the sector is only up 0.3% in the year-to-date frame, it is the only sector among major S&P 500 domains that finished in the positive territory during this period. Meanwhile, the sector gained nearly 2.6% in the past one-month period when the other major sectors registered a minimum loss of 4%. Before suggesting the appropriate utility mutual funds for your portfolio, let’s find out what is propelling the demand of securities from the utility sector. Why Utility? Concerns over China-led global growth issues and a persistent slump in oil prices dampened investor sentiment from the start of 2016, and have dragged down the major benchmarks into negative territory. Rising expectations about the lift-off of Iranian sanctions, which happened yesterday, dragged down the energy sector, which in turn weighed on the benchmarks on Friday. While WTI crude plunged by 6.1% to a 12-year low level of $29.42 per barrel, Brent crude declined nearly 0.1% to $31.01 a barrel. The VOLATILITY S&P 500 (VIX) – an important indicator of volatility level – jumped 12.2% on Friday and surged 6.3% in the year-to-date frame. In this volatile environment, the utility sector provides safety to investors due to its higher immunity against market peaks and troughs. Though the utility sector, which requires a high level of debt, was initially affected by the rate hike, its safe haven appeal gradually offset the impact. Also, after declining significantly in 2015, utility stocks are now offering attractive entry points. Meanwhile, the sector is also popular among investors for generally offering stable and healthy yields. Additionally, demand for essential services such as those provided by utilities is believed to remain unchanged even during difficult times. This is also an important factor behind the stability of the sector even during a market downturn. 3 Mutual Funds to Buy Given the safety and yields that are latent in the sector under discussion, below we present 3 utility mutual funds that carry either a Zacks Mutual Fund Rank #1 (Strong Buy) or #2 (Buy). 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 the 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. These funds have encouraging 4-week, and 3- and 5-year annualized returns. The minimum initial investment is within $5000. These funds also have a low expense ratio. American Century Utilities Fund Investor (MUTF: BULIX ) invests a large portion of its assets in equities related to the utility industry. BULIX’s portfolio is constructed on qualitative and quantitative management techniques. In the quantitative process, stocks are ranked on their growth and valuation features. BULIX currently carries a Zacks Mutual Fund Rank #1. It boasts a 4-week return of 3.2%. The 3- and 5-year annualized returns are 9.2% and 8.6%, respectively. The annual expense ratio of 0.67% is significantly lower than the category average of 1.25%. BULIX has a yield of 2.87%. Franklin Utilities Fund A (MUTF: FKUTX ) seeks capital appreciation and current income. FKUTX invests a large chunk of its assets in common stocks of public utilities that are involved in providing electricity, natural gas, water, and communications services. FKUTX currently carries a Zacks Mutual Fund Rank #2. It has a 4-week return of 4.1%. The 3- and 5-year annualized returns are 9.2% and 10.5%, respectively. The annual expense ratio of 0.73% is also lower than the category average. FKUTX provides a yield of 2.77%. Fidelity Telecom and Utilities (MUTF: FIUIX ) focuses on acquiring common stocks, investing heavily in telecom and utility companies. FIUIX may purchase both foreign and domestic securities. FIUIX utilizes fundamental analysis to select its holdings, studying both firm-specific and broader market and economic factors. FIUIX currently carries a Zacks Mutual Fund Rank #2. It boasts a 4-week return of 3.3%. The 3- and 5-year annualized returns are a respective 7.7% and 9.2%. The annual expense ratio of 0.79% is lower than the category average. FIUIX provides a yield of 2.06%. Original Post

3 Strong Buy Franklin Templeton Mutual Funds

Founded in 1947, Franklin Templeton Investments – a segment of Franklin Resources, Inc. – seeks to provide investment management strategies and integrated risk management solutions to individuals, institutions, pension plans, trusts and partnerships. With over 650 investment professionals in 35 countries, the company invests in public equity, fixed income and alternative markets. The company manages assets worth over $866.5 billion with more than 9,300 employees. Below we share with you 3 top-rated Franklin Templeton mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and we expect the fund to outperform its peers in the future. Franklin Mutual Financial Services Z (MUTF: TEFAX ) seeks growth of capital. TEFAX invests a major portion of its assets in undervalued companies that are involved in the financial services domain. TEFAX may also invest in merger arbitrage securities and securities of distressed companies. TEFAX may invest a significant portion of its assets in non-US securities. The Franklin Mutual Financial Services Z fund has a three-year annualized return of 10.9%. Andrew B. Sleeman is one of the fund managers having managed TEFAX since 2009. Franklin California High Yield Municipal Advisor (MUTF: FVCAX ) invests a large share of its assets in municipal securities that pay interest, which is exempted from taxes collected by the government and the State of California. FVCAX may also invest all of its assets in instruments that provide return subject to minimum tax. FVCAX may invest a maximum of 35% of its assets in municipal bonds approved by the US territories including Puerto Rico. The Franklin California High Yield Municipal Advisor fund has a three-year annualized return of 5.2%. FVCAX has an expense ratio of 0.53% as compared to a category average of 0.90%. Franklin International Small Cap Growth A (MUTF: FINAX ) seeks capital growth over the long run. It invests the majority of its assets in a wide range of tradable equity and related securities of small foreign companies. FINAX focuses on purchasing common stock. FINAX invests in securities of companies with market capitalizations below $5 billion or similar to those included in the Morgan Stanley Capital International (MSCI) Europe, Australasia, Far East (EAFE) Small Cap Index. The Franklin International Small Cap Growth A fund has a three-year annualized return of 5.9%. As of September 2015, FINAX held 40 issues with 5.12% of its assets invested in Optimal Payments PLC. Original Post

‘Ride An Elephant’ In 2016

By Carl Delfeld In the 19th century, there was a common expression used to describe the early intrepid explorers of the American West. They were said to be “seeing the elephant” – that is, they were seeing “all that could be seen.” On Wall Street today, brokers looking for 10-bagger stocks, and portfolio managers seeking big gains, are similarly said to be “hunting for elephants.” In the 21st century, the best chance of finding these elephants is by looking for them in emerging and frontier markets. These markets have growth that may be up to three times that of America and Europe, which is fueled by a young, vibrant consumer class, as well as some of the world’s most fascinating cultures, nature, and landmarks. One great New Year’s resolution for you would be to see the elephants with your own eyes this year. I can assure you that you’ll learn a lot, have great fun, and uncover some big opportunities that you would otherwise miss sitting in your living room. Investing With the Big Shots I’ve been fortunate enough to have on-the-ground experience in many of these markets, particularly in Asia and Latin America. Last year I teamed up with Global Frontiers, which organizes and leads institutional research trips in these dynamic markets. On these trips we meet with the insiders and heavy hitters that help shape a country’s power structure, stock market, and foreign policy. I’ve also developed friendships with a small circle of tycoons – sometimes referred to as “Taipans ” – a term which roughly translates to “big shots.” If you meet and spend any time with such tycoons, a light bulb could go off in your head. You’re better educated and have much better circumstances compared to most new tycoons. So what gives them their edge? Why do they see opportunities that elude the rest of us? The answer is, they think big and are very attentive to what’s happening on the ground in other countries and markets. They have great personal and professional networks that feed them valuable intelligence. Add a pinch of imagination, and a shot of courage, and you have a potential tycoon. If you wish to become a Taipan, I suggest you look beyond China and India in the coming year to a story that’s being completely missed by even the most sophisticated investors. Ten Southeast Asian nations will move ahead in 2016 as part of an ambitious, America-backed initiative to join their economies in a common market. The goal is to increase their common influence, form a counterweight to China, and boost prosperity for the region’s 622 million citizens. These countries share more than geography. They have a young tech-savvy population with a rising middle class and booming consumer markets. For example, Indonesian consumer spending has more than doubled in the last decade as it nears a $1 trillion economy. Singapore is already the world’s richest nation on a per capita basis. And Vietnam has the fastest-growing economy in the world and is projected to do even better this year. There are country ETFs for almost all of these countries, but for one-stop shopping, consider the Global X Southeast Asia ETF (NYSEARCA: ASEA ). This basket of 40 stocks was off 20% in 2015, giving you a nice value entry point. If Asia is too far and too exotic for your tastes, visit Latin America. The Brazilian market has suffered both major losses and a plummeting currency, so your U.S. dollar will go far whether you spend it or invest it in Brazil. I visited Panama last year and was astonished at the progress it’s made as a regional trade and financial center. Getting to see the project aimed at doubling the size of the Panama Canal made the trip worth-while. Other ideas? The energy-driven iShares MSCI Colombia Capped ETF (NYSEARCA: ICOL ) was down over 40% last year, while the iShares MSCI Mexico Capped ETF (NYSEARCA: EWW ) held up extremely well on a relative basis, even as Mexico becomes a favorite base for global manufacturing. Mexican wages are now actually below those in China. I encourage you to get going and see these opportunities for yourself. Then consider investing in a blend of these markets that are trading at bargain basement prices, and offer some of the best hedges on the U.S. dollar. This is your opportunity – now go out and seize it. Link to the original post on Wall Street Daily