Best No Load Mutual Funds for 2012
AlphaProfit Provides New Mutual Fund Recommendations
The AlphaProfit No Load Growth model portfolio will be reconstituted on November 18 with best no load mutual funds in domestic, international, and emerging market categories.
Stocks have found the going tough in the second half of 2011.
In the U. S., the SPDR S&P 500 ETF (SPY) that tracks the popular namesake benchmark is down 5% in the second-half. The iShares Russell 2000 ETF (IWM) that indexes to the Russell 2000 small-cap proxy is down a larger 11%.
Most overseas markets have fared worse.
The iShares MSCI EAFE ETF (EFA) that invests in developed markets outside the U.S., and the Vanguard ETF (VWO) that invests in emerging markets are both down 17%.
Commenting on the market environment, Dr. Sam Subramanian, Managing Principal of AlphaProfit Investments, LLC and Editor of AlphaProfit's Investment Newsletters said, 'The excess debt widely prevalent in the financial systems of developed countries is now taking a toll. The U. S. lost its AAA standing in Standard and Poor's credit debt rating system during the third quarter. Several European nations are finding it difficult to finance their sovereign debt, with the situation in Greece and Italy becoming most precarious.'
The European crisis adds to other negatives.
The U. S. unemployment rate rocketed into double-digit territory after the 2008 financial crisis. Since then, job creation has not been adequate to make a dent in the unemployment rate.
Dragging down net job creation, layoffs in the government sector in recent months have offset hiring in the private sector.
At a global level, a slowdown in China's economy is sticking point for investors as well. Read more in 'Investing in China Mutual Funds and China ETFs: Right Time Now?'
'The possibility of a euro zone collapse in combination with other negatives has unnerved investors and this is reflected in higher stock price volatility', says Dr. Subramanian.
The volatility index ($VIX), a gauge of investor fear, has averaged 31.2 in the second half.
To put this in perspective, the volatility index averaged just 18.0 during the first-half of 2011 and 42.9 during the 9-month period from July 2008 to March 2009 that surrounds the financial crisis.
Risk and Opportunity in Global Stock Markets
Unlike the Federal Reserve and the Bank of England, that readily stepped in to become lenders of last resort to support the economies of the U. S. and U. K., the European Central Bank, with its focus on inflation, has been reluctant to take on such a role and bail out troubled European nations.
The result ... continuing uncertainty.
Macroeconomic uncertainty has taken a toll on stock prices around the globe in the second-half with European shares coming under pressure in particular.
Dr. Subramanian says, 'You now have several high quality European names trading at compelling valuation metrics.'
He cites ArcelorMittal (MT), BT Group (BT), Novartis (NVS), Total (TOT), and Siemens (SI) as examples of companies that trade at single-digit forward P/Es, yielding over 3.7%.
Given the backdrop of strong double-digit EPS surprises from a diverse range of U. S. companies including Boeing (BA), Caterpillar (CAT), DuPont (DD), Google (GOOG), and MasterCard (MA), U. S. stocks can take off if the ECB takes effective steps to deal with the sovereign debt crisis and gives investors comfort.
And, therein lies the risk. Will the central bank act soon or would it need a precipitating event?
Best No Load Mutual Funds for 2012
AlphaProfit's no-load mutual fund model portfolio will be repositioned with new no load mutual fund recommendations on November 18.
This model portfolio has gained 51% since the start of 2009 compared to the 33% advance for its benchmark comprising of broad U. S. and foreign indexes.
During the past 6 months, the decision to overweight Japan through the Hennessy SPARX Japan Fund (SPXJX) has worked to this portfolio's advantage. This fund has outperformed the iShares MSCI EAFE ETF by 11%.
The portfolio has benefited from strong performance of selections like Janus Overseas (JAOSX), Matthews India (MINDX), Wasatch International Growth (WAIGX), and Yacktman (YACKX) during the past 3 years.
Looking ahead to the repositioning, Dr. Subramanian said, 'Market uncertainty is high at this point with risk and opportunity balanced. Accordingly, we intend to back up the asset allocation advice we provide to AlphaProfit Premium Service subscribers with a mix of offensive and defensive no load mutual funds.'
'By investing the right amount of assets in this mix of the best no load mutual funds, investors can make further gains in 2012 while limiting downside if the market turns even more challenging', concluded Dr. Subramanian.
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AlphaProfit Investments, LLC is an independent investment research firm based in Sugar Land, TX. AlphaProfit publishes the AlphaProfit Sector
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