Mutual Fund Picks for 2011 and Best ETFs for 2011:
AlphaProfit to Provide New Fund Picks on 12-31-10
The sector-based AlphaProfit Core and Focus model portfolios will be reconstituted on December 31 to include newly recommended mutual funds and ETFs.
The markets are ending 2010 on a buoyant note. Helped largely by the 21% rally in stock prices since August, stock prices as measured by the S&P 500 are up 15% for the year.
The Federal Reserve's move to print $600 billion in the name of Quantitative Easing Phase 2 has provided ample liquidity for financial assets and dispelled fears of another economic slowdown. Expectations of an economic boost resulting from tax policy compromises reached between President Obama and the Republican leaders have raised investor optimism.
The potent twin forces of ongoing monetary and imminent fiscal stimulus have helped the stock market overcome quite a few jitters in recent weeks. These include Ireland's bailout, deteriorating confidence in the solvency of Portugal & Spain, and skirmishes between North & South Korea.
Staying true to their sector selection track-record since 1994, the AlphaProfit Fidelity and ETF Core and Focus model portfolios outperformed the S&P 500 in 2010.
AlphaProfit's Fidelity Core and Focus model portfolios are up 23% and 24%, respectively while the ETF Core and Focus model portfolios are both up 24%. The AlphaProfit model portfolios benefited from strong performance of auto stocks like Ford (F) and transportation stocks like Union Pacific (UNP) that gained 67% and 47%, respectively.
Commenting on the performance of the model portfolios, Dr. Sam Subramanian, Managing Principal of AlphaProfit Investments, LLC and Editor of the AlphaProfit's Premium Service Investment Newsletter said, 'Fidelity Select Automotive (FSAVX) and Fidelity Select Transportation (FSRFX) gained 45% and 40%, respectively in 2010 to contribute to the performance of the Fidelity portfolios. In the ETF space, the portfolios benefited from the 38% gain of SPDR S&P Retail (XRT) and 34% gain of Market Vectors Gold Miners (GDX).'
With 2011 being the third year in the Presidential election cycle, many investors tend to be optimistic on the prospects for the market.
Dr. Subramanian supports this optimism to a point. 'Continued U. S. economic growth, rising corporate profits, and favorable interest rate & tax policies can help stock prices gain in 2011', he says.
Citing the backup in the yield of the 30-year Treasury bond from a low of 3.46% on August 25 to 4.41%, Dr. Subramanian says, 'Investors are already reacting to the possibility of both higher growth and higher inflation in 2011.'
There are factors that can however go wrong for the stock market and investors need to exercise discretion.
'The impact of quantitative easing programs on inflation and tax policy compromises on budget deficits can become sticking points', cautions Dr. Subramanian.
At some point in 2011, the U. S. will likely need to act on reducing the budget deficit.
'While Wall Street often likes political gridlock, the impasse can become a liability if markets start to demand a quick credible deficit reduction plan', says Dr. Subramanian.
The policy differences between developed nations and emerging economies in promoting growth and curbing inflation could also strain currency markets and weigh negatively on the stock market.
Mutual Fund Picks for 2011 and Best ETFs for 2011
The performance of the AlphaProfit model portfolios has been helped by the selection of consumer discretionary and retailing investments during the past two years.
The AlphaProfit Fidelity model portfolios have included investments like Fidelity Select Retailing (FSRPX) and Fidelity Select Consumer Discretionary (FSCPX) that are up 103% and 82%, respectively. Among the AlphaProfit ETF portfolio selections, SPDR S&P Retail and Vanguard Consumer Discretionary (VCR) scored gains of 144% and 92%, respectively.
AlphaProfit's Core and Focus model portfolios will be repositioned with new mutual fund picks and best ETFs on December 31.
Looking ahead to the repositioning, Dr. Subramanian said, 'After a couple of good years, our top priority is to help readers preserve the gains and build on them. While this is not a time to avoid risk altogether, the proper course is to mix aggressive investments with resilient ones that can buck the downdraft if the aforementioned threats turn into reality.'
'By combining sectors selected from AlphaProfit's proven ValuM investment process with prudent asset allocation, we believe we can help investors position their portfolios for reaping rewards in 2011 while maintaining adequate downside protection', 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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with Fidelity funds and exchange-traded funds.
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