Best No Load Mutual Funds for Rising Interest Rates
AlphaProfit to Provide New Recommendations on Best Stock Mutual Funds
On August 21, AlphaProfit will reconstitute its No Load Mutual Fund model portfolio with top rated mutual funds for rising interest rates.
Helped by global stimulus measures and favorable earnings reports major stock markets around the world are up at the mid-point of 2013's third quarter.
Fidelity Spartan 500 Index Fund (FUSEX) that tracks the large-cap S&P 500 index ($SPX) is now up 18% for the year.
Small cap stocks have performed better.
Fidelity Spartan Small Cap Index Fund (FSSPX) and Schwab Small Cap Index Fund (SWSSX) that track the small-cap Russell 2000 index ($RUT) have advanced more than 21%.
While many foreign stock markets have lagged the U. S. market, developed foreign markets have performed better than emerging markets.
Fidelity Spartan International Index Fund (FSIIX) that tracks the MSCI EAFE index is up 11%.
Among developed markets, the Japanese market has led the way. Fidelity Japan Fund (FJPNX) is up 18% for the year while the Fidelity Small Cap Japan Fund (FJSCX) has performed better gaining 42%.
Fidelity Spartan Emerging Markets Index Fund (FPEMX) that tracks FTSE Emerging Index is down close to 9%. Fidelity Latin America Fund (FLATX) and Matthews India Fund (MINDX) are down 18% and 17%, respectively.
AlphaProfit's No-Load, No-Transaction-Fee Growth Model Portfolio that includes a mix of domestic and foreign funds is up over 16% this year, ahead of the 13% advance recorded by its global market benchmark.
The model portfolio has benefited from contributions made by Fidelity Small Cap Value Fund (FCPVX), Janus Venture Fund (JAVTX), Matthews Japan Fund (MJFOX), and Oakmark International Fund (OAKIX) that are up 23%, 22%, 24%, and 21%, respectively.
Is it Right to Avoid Stock Mutual Funds on Rising Interest Rates?
Off-late, concerns of the Federal Reserve tapering monthly bond purchases have weighed on U. S. stocks.
Interest rates are up. The yield on the 10-year Treasury bond now stands at 2.83%, up 107 basis points since the start of 2013. High-yielding groups such as REITs and utilities are under pressure.
Investors are now scrutinizing each economic data point with an eye to get a read on when the Fed would start tapering bond purchases.
Recent data have however not provided clear direction. Data from the housing and job sectors point to a strengthening economy while inflation data do not present a compelling case for reducing stimulus.
Dr. Subramanian, Editor of AlphaProfit's Premium Service Investment Newsletter says, 'There is reason to be conservative and cautious in the near-term. Stock prices are likely to be choppy and could very well head lower in the near-term as investors adjust their expectations for economic stimulus and growth.'
He however doesn't see this as a reason to be very bearish and avoid stocks.
Dr. Subramanian explains, 'The yield curve has strengthened in recent months. The difference between yields on five- and ten-year Treasury notes has widened to the highest since September 2011. A strengthening yield curve augurs well for stocks. The smart money is betting on the economy gaining traction.'
Rising interest rates need not be a negative for stocks as long as rates go up for the right reason.
'If interest rates are rising because the economy is getting better, it is generally good for corporations as long as rates do not get out of control. During periods of slow uptick in rates, companies often have pricing power and this translates into earnings expansion,' elaborates Dr. Subramanian.
Best No Load Mutual Funds for Rising Interest Rates
The AlphaProfit No Load, No Transaction Fee Growth model portfolio will be repositioned with new recommendations of best stock mutual funds on Tuesday, August 21. 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 16.6% annual rate since the start of 2009.
In comparison, the growth portfolio's benchmark consisting of domestic and foreign indexes has gained at a 12.2% annual rate.
In simple terms, the AlphaProfit No Load No Transaction Fee Growth model portfolio has helped Premium Service subscribers earn 47% more money than index investors.
The model portfolio has benefited from contributions made domestic funds like Fidelity Small Cap Discovery Fund (FSCRX) and Janus Venture Fund that are up over 187% since 2009 as well as foreign funds like Wasatch International Growth Fund (WAIGX) and Westcore International Small Cap Fund (WTIFX) are up over 180%.
Looking ahead to new mutual fund recommendations Dr. Subramanian says, 'Our top priority is to help subscribers preserve their recent gains by selling selected stock mutual funds. Secondly, we seek to enable subscribers position their portfolios for additional gains going forward.'
Elaborating on best no load mutual funds for rising interest rates Dr. Subramanian says, 'From an investment style perspective, large cap stocks are likely to perform better than small cap stocks with growth leading value. Likewise from a sector perspective, economically sensitive sectors like industrials and financials can do well.'
'We look to recommend best no load mutual funds with emphasis on the right investment styles and sectors to help subscribers add to their gains during a period of rising interest rates', Dr. Subramanian concludes.
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