Top Rated Fidelity Mutual Funds and Top Rated ETFs
AlphaProfit Provides New Fidelity Mutual Fund and ETF Recommendations
The AlphaProfit Focus and Core model portfolios will be reconstituted on September 30 with top rated Fidelity mutual funds and top rated ETFs.
Stock prices have come under renewed pressure after the Federal Reserve announced its latest stimulus effort last week.
These recent losses in stock prices add to the toll already taken on them by the sovereign debt crisis in Europe, anemic job growth in the U. S., and slowing growth in China.
Global stock prices as measured by the iShares MSCI ACWI Index ETF (ACWI) that tracks the MSCI All-Country World Index are down 21% from their 2011 high.
In the U. S., the SPDR S&P 500 ETF (SPY) that tracks its namesake index is down nearly 16% from its 2011 high set on April 29.
The SPDR Dow Jones Industrial Average ETF (DIA) that mirrors the Dow Jones Industrial Average has fallen pretty much in tandem with the SPDR S&P 500 ETF.
Large-cap technology stocks like Apple (AAPL) & Microsoft (MSFT) as well as consumer discretionary names like Amazon.com (AMZN) have held up better and limited the PowerShares QQQ ETF's (QQQ) loss to high single-digits.
Commenting on the market environment, Dr. Sam Subramanian, Managing Principal of AlphaProfit Investments, LLC and Editor of the AlphaProfit's Premium Service Investment Newsletter said, 'Fears of euro zone breaking up and the possibility
of a global recession have weighed heavily on economically sensitive sectors. Shares in the energy, industrials, and materials sectors have borne the brunt of the decline since the S&P 500 topped in late April.'
Energy Select Sector SPDR ETF (XLE), Industrial Select Sector SPDR ETF (XLI), and Materials Select Sector SPDR ETF (XLB) are each down over 23% since April 29.
'Sectors less sensitive to the health of the global economy have fared better. Shares in the utilities sector have actually gained in this downbeat environment. The steep drop in commodity prices has helped consumer-related shares to hold better in a relative sense,' said Dr. Subramanian.
Helped by strong performance of Dominion Resources (D) and Southern Company (SO), Utilities Select Sector SPDR ETF (XLU) has gained 1%. Consumer Staples Select Sector SPDR ETF (XLP) and Health Care Select Sector SPDR ETF (XLV) have been among the smaller losers since the market's 2011 top.
Despite portrayals of dire scenarios, ... ranging from euro zone break-up & a global recession to Greek debt default & dysfunctional governments ... Dr. Subramanian is not entirely negative on owning stocks.
Dr. Subramanian believes that stocks can decline further in the near-term on concerns that lack of a coordinated, proactive action from the global financial community could affect world economic growth.
Dr. Subramanian asserts, 'At current valuation levels, stocks already reflect some of what can go wrong and current prices, at least partially, discount macroeconomic risks'.
Members of the S&P 500 index currently trade below 13-times last 12-month earnings. Such valuation levels have often provided support in prior bear markets. Specifically, the current P/E ratio is 5% below the average valuation seen at the bottom of the last nine bear markets.
The biggest and quickest gains often materialize when markets bottom and a new bull market ensues.
In this regard, Dr. Subramanian sees three reasons that can help stocks to turn the corner.
Europe is finally showing signs of getting its act together. Europe's governments and the European Central bank are working on easing financial market tensions by setting up a permanent rescue fund and by offering banks 12-month loans, respectively.
The Federal Reserve aims to increase consumer spending and stimulate job creation by driving mortgage-refinancing activity. The central bank plans to purchase $400 billion of Treasuries with six year to 30-year maturities and reduce mortgage rates. The impact of the Federal Reserve's effort to lower mortgage rates should not be underestimated.
Lastly, the interest rate cycle in emerging markets is starting to look more favorable now. As commodity prices trend lower, emerging nations are shifting their emphasis from fighting inflation to focusing on growth. Brazil and Turkey have recently cut interest rates while others like Russia and Malaysia are planning to hold rates flat in the near-term.
Top Rated Fidelity Mutual Funds and Top Rated ETFs
The AlphaProfit Core and Focus model portfolios will be repositioned with new recommendations of top rated Fidelity mutual funds and top rated ETFs on Friday, September 30.
Valuation, momentum, and news quality are the three elements of the investment selection and risk management process AlphaProfit uses to consistently pick winners among Fidelity Select funds, sector ETFs, and sector mutual funds over both the long-term and short-term.
Compounding at an annual rate of 21.6%, a dollar invested in this selection process in 1994 is now worth $30.93 while a comparable investment in the S&P 500 is worth just $3.86.
The AlphaProfit model portfolios have been ranked #1 12 times by Dow Jones Hulbert Financial Digest.
See Hulbert Financial Digest Rankings.
Commenting on the near-term performance of the Fidelity and ETF model portfolios, 'Our recommendation to readers to overweight healthcare investments at the end of the first quarter has proven timely', said Dr. Subramanian.
The performance of Johnson & Johnson (JNJ), Abbott Laboratories (ABT), and Bristol-Myers Squibb (BMY) shares has helped healthcare investments to hold up better.
'So too has our recommendation to stay out of banks and brokerage firms since the start of 2011', added Dr. Subramanian.
Looking ahead to the new recommendations, Dr. Subramanian said, 'Given heightened levels of uncertainty, our top priority is to help readers preserve capital. That said, this is not a time to avoid risk altogether given the beating stock prices have already suffered.'
'By combining AlphaProfit selections of top rated Fidelity Mutual Funds and top rated ETFs with prudent asset allocation, we believe we can help investors mitigate the impact of this bearish phase while positioning portfolios for reaping greater rewards when markets embark on an uptrend', concluded Dr. Subramanian.
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By Hulbert #1 rank winner Dr. Sam Subramanian
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AlphaProfit Investments, LLC is an independent investment research firm based in Sugar Land, TX. AlphaProfit publishes the AlphaProfit Sector
Investor's Newsletter, edited by Dr. Sam Subramanian. Leveraging sector funds, the Newsletter provides high-performance model portfolios
with Fidelity funds and exchange-traded funds.
It also includes actionable stock recommendations. This newsletter features among MarketWatch's top 10 investment newsletters and has won
the coveted #1 rank from Hulbert Financial
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