Tag Archives: zacks funds

4 Balanced Mutual Funds To Buy For Steady Returns

Balanced funds provide investors with the convenience of buying into a single fund rather than holding both equity and bond funds. This category of funds also reduces a portfolio’s volatility while providing higher returns than pure fixed-income investments. Fund managers of such funds also enjoy the flexibility of varying the proportion of equity and fixed income investments in response to market conditions. An upswing may prompt them to hold a relatively higher share of equity in order to maximize gains, whereas a downturn sees them turning to fixed-income investments to stem losses. Below, we will share with you four top-rated balanced mutual funds . Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) as we expect the fund to outperform its peers in the future. RidgeWorth Moderate Allocation Strategy Fund A (MUTF: SVMAX ) seeks capital growth over the long run and current income. In order to achieve its objective, SVMAX invests 40-60% of its assets in underlying funds that predominantly invest in equity securities. It also invests 30-60% of its assets in funds investing in fixed-income securities. SVMAX invests the rest of its assets in cash and cash equivalents, which also include unaffiliated money market funds, the U.S. government affiliated securities and short-term paper. The RidgeWorth Moderate Allocation Strategy A fund has a three-year annualized return of 4.4%. SVMAX has an expense ratio of 0.67% as compared to the category average of 0.89%. T. Rowe Price Personal Strategy Balanced Fund No Load (MUTF: TRPBX ) invests approximately 60% of its assets in stocks and 40% of its assets in bonds. TRPBX also invests in money market securities. It seeks to achieve maximum total return through capital appreciation and income. The T. Rowe Price Personal Strategy Balanced fund has a three-year annualized return of 5.6%. Charles M. Shriver is the fund manager since 20 1 1. John Hancock Funds Lifestyle Aggressive Portfolio A (MUTF: JALAX ) invests most of its assets in underlying funds, which in turn focus on acquiring equity securities. JALAX’s assets also get invested in underlying funds that primarily invest in fixed-income securities. It invests in a wide range of underlying funds that allocate their assets in equity securities of companies of any size throughout the globe. The John Hancock Funds Lifestyle Aggressive A fund has a three-year annualized return of 5. 1%. JALAX has an expense ratio of 0.47% as compared to the category average of 0.8 1%. Fidelity Balanced Fund No Load (MUTF: FBALX ) seeks income and capital growth. FBALX invests around 60% of its assets in equity securities and the remainder in a balance of debt securities including bonds and lower-quality debt instruments. FBALX is expected to invest a minimum of one-fourth of its assets in fixed-income senior securities. It invests in securities throughout the globe. The Fidelity Balanced fund has a three-year annualized return of 7.7%. As of January 20 16, FBALX held 1, 186 issues with 2.45% of its assets invested in Fidelity Cent Invt Portfolios. Original post

Do TIPS ETFs Deserve A Look As Inflation Rises?

Inflation has been floppy for most developed economies, including the U.S., for quite some time now. Reaching 2% inflation – as targeted by most of the central banks – has become a tall order, with both the eurozone and Japan struggling to ward off deflation. The nagging oil price crisis over the last one and a half years seems to be the main culprit. While the ECB and Bank of Japan were compelled to pursue QE measures to fight deflationary threats. Back home, subdued inflation checked the Fed from being aggressive on the policy tightening issue. Even after the lift-off in December, market watchers were under the impression that the Fed will likely apply a single hike, at the most, this year, thanks to the global market upheaval and subdued inflation. In such a scenario, the U.S. inflation rate rose 1.4% for the fourth successive month in January – the best annual gain last seen in October 2014, and surpassing market expectations of a 1.3% gain. Core consumer price index (CPI) jumped to 2.2% in January. The reading was the highest since June 2012, and it came above the goal set by the Fed at 2%. Higher rents, healthcare and transportation costs boosted inflation in January. Excluding food and energy, consumer prices rose 0.3% in January – a four and-a half year high, and higher than the last month’s increase of 0.2%. Time for TIPS ETFs? TIPS offers robust real returns during inflationary periods, unlike its unprotected peers in the fixed-income world. These securities pay an interest on an inflated principal amount (principal rises with inflation), and when the securities mature, investors get either the inflation-adjusted principal or the original principal, whichever is greater. As a result, both principal amount and interest payments will keep on rising with increasing consumer prices. This mechanism makes TIPS ETFs investors’ darlings in times of rising inflation. Presently, the iShares TIPS Bond ETF (NYSEARCA: TIP ) is one of the biggest beneficiaries of this trend, having hauled in $256.5 million last week. The fund is up 1.5% this year (as of February 19, 2016). Is the Bet Worth It? Though the decline in oil prices has slowed, things are yet to stabilize in the oil patch. So, it is too early to take a call on the inflation picture. Of course, the recent trend is pointing toward solid inflation, and the upbeat January data has made the case stronger for faster Fed tightening. However, a lot of the future trend of inflation depends on the movement of energy prices. Still, investors with a long-term view can count on the potential uptick in inflation, as the U.S. economic backdrop remains more or less ,steady and issues in the energy space should be sorted sooner or later. With the economy and the job market mending, inflation will definitely increase in coming months. Below, we highlight a few outperforming TIPS ETFs which could be compelling investments if U.S. inflation continues to rise (see all TIPS ETFs here ). PIMCO 15+ Year U.S. TIPS Index ETF (NYSEARCA: LTPZ ) This fund targets long-term securities of the TIPS market by tracking the BofA Merrill Lynch 15+ Year US Inflation-Linked Treasury Index. In total, the product holds 7 bonds having effective maturity of 26.41 years and carrying a high interest rate risk, given the effective duration of 21.83 years. In terms of credit quality, the fund boasts top-rated bonds from Moody’s and the S&P, suggesting lower default risk. The ETF is less popular and less liquid, with AUM of $98.1 million. LTPZ has generated excellent returns of about 3% so far this year (as of February 19, 2016). SPDR Barclays Capital TIPS ETF (NYSEARCA: IPE ) This fund targets long-term securities of the TIPS market by tracking the Barclays Capital U.S. Government Inflation-Linked Bond Index. In total, the product holds 37 bonds having effective maturity of 9.08 years and carrying a moderate interest rate risk, given the effective duration of 4.90 years. In terms of credit quality, the fund boasts top-rated bonds. The ETF is moderately popular and less liquid, with AUM of $637.5 million. IPE has gained about 1.6% so far this year (as of February 19, 2016). PIMCO Broad U.S. TIPS ETF (NYSEARCA: TIPZ ) This $66.4 million fund looks to track the BofA Merrill Lynch US inflation-linked Treasury index. The fund holds 19 securities and has an effective maturity of 9.09 years, while its effective duration is 8.26 years. It charges 55 bps in fees, and is up 1.8% so far this year (as of February 19, 2016). Original Post

QQQ ETF In Spotlight On Imminent Changes To Nasdaq Indexes

Nasdaq has recently announced changes to the composition of the Nasdaq 100 Index and the Nasdaq 100 Equal Weighted Index effective before market opens on February 22, 2016. The benchmark will remove KLA-Tencor Corporation (NASDAQ: KLAC ), one of the world’s leading suppliers of process control and yield management solutions for the semiconductor and related microelectronics industries, while CSX Corporation (NASDAQ: CSX ), a premier transportation company, will be added to both the index. Changes in this index often lead to alteration in the fund composition of ETFs closely tracking the index. This brings the PowerShares QQQ Trust ETF (NASDAQ: QQQ ) – the largest and the most popular product in the large cap growth space – in focus. The fund tracks the Nasdaq 100 index, and as such, changes in the index are expected to alter the fund’s allocation. Both the fund and the index are rebalanced and reconstituted on a yearly basis. QQQ ETF in Focus Launched in March 1999, QQQ holds a basket 106 stocks. Its underlying index, the Nasdaq 100, includes 100 of the largest domestic and international non-financial companies listed on the Nasdaq stock market based on market capitalization. Apple Inc. (NASDAQ: AAPL ) dominates the fund with 11.3% allocation, followed by Microsoft Corporation (NASDAQ: MSFT ) with 8.7% allocation. Apart from these two stocks, all the other individual securities have less than 6% exposure each in the fund. The stock to be removed from the index, KLA-Tencor, has an exposure of less than 1% in the fund. In terms of sector exposure, the fund is heavily concentrated in Information Technology, with 56.5% of assets invested. Consumer Discretionary and Healthcare also get double-digit exposure in this ETF, with 19.9% and 13.8% weightage, respectively. The fund manages an asset base of $34.8 billion and trades in heavy volumes of 42.5 million shares a day. The product is one of the cheapest in its space, charging 20 basis points as fees. QQQ currently carries a Zacks ETF Rank #3 or Hold rating with Medium risk outlook. QQQ has lost 0.6% in the last one month (as of February 16, 2016), compared to the 1.05% gain for the broad market fund the SPDR S&P 500 Trust ETF (NYSEARCA: SPY ) and 1.6% for the SPDR Dow Jones Industrial Average ETF (NYSEARCA: DIA ). In the year-to-date time frame, QQQ (down 10.4%) has underperformed as compared to DIA (down 6.7%) and SPY (down 6.9%). Being a tech-heavy fund, QQQ has witnessed a sluggish performance due to global growth concerns, a strengthening dollar, weak corporate earnings and uncertain timing of the next interest rate hike. The recent changes made in the index composition are unlikely to have any major impact on the fund’s composition.