Best Funds for Presidential Election Year Stock Market
AlphaProfit to Provide New Mutual Fund Recommendations
On August 22, AlphaProfit will reconstitute the No Load Mutual Fund model portfolio with best mutual funds for the Presidential election year stock market.
Stock markets around the world are in positive territory at the mid-point of the third quarter in 2012, a Presidential election year in the U. S.
Fidelity Spartan 500 Index Fund (FUSEX) that tracks the large-cap S&P 500 index ($SPX) is up 14%.
Small cap stocks have lagged a bit.
Fidelity Spartan Small Cap Index Fund (FSSPX) and Schwab Small Cap Index Fund (SWSSX) that track the small-cap Russell 2000 index ($RUT) are both up over 11%.
From an investment style perspective, growth has trumped value despite investors' preference for dividend-yielding stocks.
According to Morningstar, the average large-cap growth fund is up 14% while the average large-cap value fund is up 11%. Among Fidelity funds, Fidelity Blue Chip Growth Fund (FBGRX) is up 17% while Fidelity Equity Dividend Income Fund (FEQTX) is up 13%.
Foreign stock markets have generally lagged U. S. stock market.
Fidelity Spartan International Index Fund (FSIIX) that tracks the MSCI EAFE index is up 8% while Fidelity Spartan Emerging Markets Index Fund (FPEMX) that tracks FTSE Emerging Index is up 7%.
While the sovereign debt crisis in Europe has restricted gains, slowing growth in emerging markets has been more damaging. On average, European funds have gained nearly 10% while Latin American and China region funds have gained just 4% each.
Among Fidelity funds, Fidelity Europe Fund (FIEUX) has advanced 13%, Fidelity Latin America Fund (FLATX) and Fidelity China Region Fund (FHKCX) are up just 2% and 6%, respectively.
Discussing the recent performance of the U. S. stock market, Dr. Sam Subramanian, Editor of AlphaProfit's Premium Service Investment Newsletter said, 'The year-to-date returns mask the volatile ride of this Presidential election year stock market. From April through June, stock prices declined on fears of an escalation in the European crisis. Optimism on economic improvement resulting from central bank actions world-wide has helped stocks to rally recently.'
Navigating through the volatility, AlphaProfit No-Load, No-Transaction-Fee Growth Model Portfolio is up over 9% this year. The model portfolio has benefited from contributions made by Fidelity Mega Cap Stock (FGRTX), Fidelity Small Cap Discovery (FSCRX), Wasatch International Growth (WAIGX), and Westcore International Small Cap (WTIFX) that are up 16%, 13%, 18%, and 14%, respectively.
Presidential Election Year Stock Market Outlook
Historically, Presidential election year stock markets have favored investors.
According to Dimensional Funds Matrix Book 2011, the U. S. stock market, as measured by the S&P 500, has gained in nearly 81% of Presidential election years since 1928.
The S&P 500 has advanced 11% on average in Presidential election years even after accounting for the staggering 37% decline in 2008.
Statistics for the third and fourth quarters are favorable too, according to Standard & Poor's data.
The third quarter stands out for average gains. The S&P 500 index has advanced an impressive 5% during the third quarter of Presidential election years.
The fourth quarter stands out for consistency. The S&P 500 has advanced in 81% of the Presidential election year fourth quarters with an average gain of 2%.
Even though history favors a good year for stocks, Dr. Subramanian's enthusiasm for the current Presidential election year stock market is tempered.
Dr. Subramanian says, 'Investors need to recognize that the U. S. stock market is already up 14% for the year. While the low point for 2012 is likely past, additional gains may be somewhat muted.'
He cautions returns can be subdued particularly if European and U. S. economic policy makers stay pat, sensing no material deterioration in global economic activity.
Best Mutual Funds for Presidential Election Year Stock Market
The AlphaProfit No Load, No Transaction Fee Growth model portfolio will be repositioned with new recommendations of best performing mutual funds on Tuesday, August 21 for the evolving market milieu. Learn more about AlphaProfit's Fidelity fund recommendations and Fidelity funds model portfolios.
The No Load NTF portfolio includes best-of-breed funds in domestic, foreign, and specialty categories selected from proven style rotation principles. This selection method has enabled the Growth Model Portfolio to gain at a 20.3% annual rate since March 2009.
In comparison, the growth portfolio's benchmark consisting of domestic and foreign indexes has gained at a 15.4% annual rate.
The AlphaProfit No Load No Transaction Fee Growth model portfolio has in essence helped Premium Service subscribers earn 40% more money than index investors.
Looking ahead to the new mutual fund recommendations Dr. Subramanian said, 'We obviously do not want to miss the opportunity of making money in what is historically a favorable period. That said, we would not throw caution to the wind and load up on high-risk investments.'
'We will look to recommend the right mix of aggressive and conservative mutual funds to help subscribers take advantage of the Presidential election year stock market while not losing sleep', concluded Dr. Subramanian.
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