What is the Best Mutual Fund to Invest in?
AlphaProfit Provides New Mutual Fund Recommendations
Given the recent increase in stock price volatility, investors wonder what is the best mutual fund to invest in. The AlphaProfit No Load Fund model portfolio will be reconstituted on August 18 with top rated mutual funds in the large cap, small cap, foreign, and specialty categories.
In recent weeks, investing in stock mutual funds has been nerve wracking.
Stock prices around the globe have slumped since late July.
In the U. S., the SPDR S&P 500 ETF that tracks its name-sake benchmark ($SPX) has dropped 15% in just 12 trading days through August 8.
ETFs that track the MSCI developed and emerging market indices, iShares MSCI EAFE ETF (EFA) and iShares MSCI Emerging Markets ETF (EEM) are down 17% and 18%, respectively.
From an investment style perspective, small caps are down more than large caps. The iShares Russell 1000 ETF (IWB) is down about 17% while the iShares Russell 2000 ETF (IWM) is down a larger 23%.
Commenting on the stock market, Dr. Sam Subramanian, Managing Principal of AlphaProfit Investments, LLC and Editor of the AlphaProfit's Premium Service Investment Newsletter said, 'The topping process actually began between late April and early May when most global markets peaked. In recent weeks, the downtrend has accelerated as several macroeconomic negatives have came together to heighten concerns on the sustainability of the current global economic expansion.'
In the U. S., macroeconomic concerns have hovered around anemic job creation, falling GDP growth rate, and most recently, the loss of the AAA credit rating after the rise in the debt ceiling.
In Europe, the sovereign debt crisis is a sticking point while in emerging economies there is risk of rising interest rates throttling growth.
Is Mr. Market Providing a Buying Opportunity?
With memories of the 2008 crash relatively fresh in investor's minds, some who did not sell right away during the last financial crisis see this as 'the next-time decline' that must be avoided.
While it is tempting to take the approach of ‘selling all stock mutual funds and asking questions later’, prudent risk management is a better solution than thoughtless exit.
Dr. Subramanian advises investors to reduce risk in their portfolios but stay invested in stock mutual funds.
He cites four reasons ... significant insider buying, strong corporate earnings, robust M&A activity, and attractive valuation ... why investors should stay with stock mutual funds and not yield to the commotion caused by macroeconomic negatives.
Insider buying. Insiders are as bullish as they were during the Great Recession and they were right then. The monthly ratio of number of insider buys to insider sells is currently at 1.25, higher than any time since Jan. 2005 other than during the Great Recession.
Corporate earnings. In second quarter reports, nearly 75% of S&P 500 member companies beat analysts' EPS forecast. Across industries, marquee names like Apple (AAPL), Boeing (BA), Halliburton (HAL), MetLife (MET), Philip Morris International (PMI), and UnitedHealth (UNH) exceeded forecasts by double-digits.
M&A activity. Corporations are interested in engaging in mergers despite macro headwinds. Earlier this week, Google (GOOG) agreed to buy Motorola Mobility Holdings (MMI) for over $12 billion.
Valuation. The S&P 500 members on average trade at 13.8 times reported earnings, a level quite modest from a historical perspective.
Dr. Subramanian says, 'If emerging economies and the European Central Bank complement the Federal Reserve's actions and the U. S. can make some headway in narrowing burgeoning deficits, the macro negatives will ease and stocks should respond with a nice rally.'
What is the Best Mutual Fund to Invest in?
AlphaProfit has had significant success in enabling Premium Service subscribers to earn market-beating returns.
Coming off the March 2009 bottom, the AlphaProfit no-load mutual fund portfolio soared 47% in 6 months. This gain trumped the domestic and foreign stock combination benchmark by 14%. Delafield (DEFIX) and Janus Overseas (JAOSX) included in the model portfolios rose 76% and 71%, respectively.
Likewise, the mutual fund model portfolio rose 22% in 6 months from the 2010 summer bottom to beat its benchmark again. Gains of 32% and 31% from Janus Triton (JATTX) and Fidelity International Small Cap (FISMX), respectively contributed to AlphaProfit model portfolio’s superior performance.
AlphaProfit now looks forward to provide recommendations on best mutual funds and repeat the successes in 2009 and 2010.
AlphaProfit's no-load mutual fund model portfolio will be repositioned with new mutual fund recommendations on August 18.
Looking ahead to the repositioning, Dr. Subramanian said, 'Our top priority is to help subscribers protect their gains. Our next mandate is to impart some degree of defensiveness to the model portfolio so that subcribers do not have to take on a nerve wracking volatile ride.'
'Lastly, we would also be looking to AlphaProfit's proven style rotation and fund selection system to do what we did in 2009 and 2010, i.e., help subscribers invest in what become the best mutual funds in the period ahead' 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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