Mutual Fund Newsletter : Protecting Your Nest Egg

If you’re like me, you’re just starting to become financially stable for the first time. You have a little bit of extra cash set aside in savings, but it’s not enough to be able to "play" with it in the stock market. You want to find a way to make your little nest egg get a higher return than if it is simply sitting in a savings account, but you need a safe and secure way to invest.

An excellent way to combine a high rate of return and a high degree of security is by investing in mutual funds. In short, a mutual fund is a stock portfolio that someone else manages for you, in which your money is in effect distributed over a wide range of different stocks, bonds, and other investments. Many fund managers write mutual fund newsletters for their unit holders helping to explain their investment decisions.

Because professionals manage your mutual fund for you, you don’t have to worry about making a mistake. And because a mutual fund is a form of distributed investment, the risks to you are very low - that is, even if an individual stock or investment does badly, the other stocks or investments in the portfolio will tend to balance it out, making you less likely to lose money.

You can find out more about mutual fund planning by contacting an investment specialist. He or she can give you the information you need, as well as help manage your mutual fund for you. By working with an investment specialist, you will find out exactly how easy it is to make money and protect your investment - just sit back, and let him or her do all the work for you!

If you do decide to go the mutual fund route, you may wish to purchase a subscription to a mutual fund newsletter. A mutual fund newsletter is a weekly digest that contains all the information you need to know about the state of the market, the various types of mutual fund, and investment-related current events. A mutual fund newsletter is vital if you wish to stay informed and on top of your game, even if you do leave most of the more difficult work to your investment specialist.

In today’s rapidly fluctuating market and unstable political and economic climate, it makes sense to keep your money in an investment that offers a high rate of return, and is safe against market forces. A mutual fund is an excellent choice for your little nest egg - to help it grow into what will one day become your great big nest egg.

Visit us for more information on top 10 large cap funds, how do mutual funds work and mutual fund selection.

By Christopher Smith Published: 10/23/2007

The Mutual Funds Guru ETFs Make Strides in Marketplace aggressive growth funds, energy mutual funds, income funds, international mutual funds, mutual funds online, no load mutual funds

Investing In Money Market Funds - Are They For You?

Money market funds are fantastic investments for those who want to put some money away without worrying about the risk that the stock markets bring. So while you cannot anticipate getting a large return on this type of investment, you can take comfort in having a stable return on your efforts. Before investing in money market funds, here are some things to consider.

Lets have a look at what money market funds are. A smart investor knows where he or she is putting their hard earned money before they invest it. Getting the right information is key to helping you make the right financial decision for you. So before you open an account, let this be a starter guide for you, but of course, talk to a financial advisor to make sure you get as many facts and figures as you can before making a decision.

Money market funds are very close to mutual funds but without the risk. The lack of risk of course means a lack of surprise when you get your statement. The stock market can be a rollercoaster sometimes, with money market funds, you can be assured that you’ll have more of your money. That said, there is no guarantee on your return.

There is a clear distinction between money market funds, and a money market account. A money market account is just a savings account that is opened at your bank. It offers a higher rate of return than your average bank account because they money is locked in for a longer period of time.

So between the money market accounts and a trading account, is a money market account. Professional managers invest in bonds, t-bills and government treasury notes. Smart money managers will trade these vehicles, knowing that when interest rates move lower, the bonds they currently hold are worth more and can be sold for a higher price before they expire. On the other hand, if interest rates move higher, then their position is not as valuable. By trading these traditionally static investments, money managers can usually get a higher return on investment than the average rate of return of their holdings.

Money market funds are ideal for those who value stability over a higher rate of return. If you are relying on your savings, this is the perfect investment vehicle. Even for those investors willing to take more risk, money market funds still play an important role. A good rule of thumb is to have a position in money market type investments that is equal to your current age. If you are 35, then 35% of your portfolio should hold these types of investments.

One final benefit to these accounts: you dont need a lot of money to open one up. Its perfect for your children’s savings accounts as well as your own portfolio. Talk to your financial advisor for more details.

Visit us today for more information on investing in money market funds and other tips on stock market investing.

By Christopher Smith Published: 8/16/2007

The Mutual Funds Guru Money Market Funds aggressive growth funds, energy mutual funds, income funds, international mutual funds, mutual funds online, no load mutual funds

High Return Investments - Which Offer the Best Returns?

If you want high investment returns you need to take a risk but the amount of risk you take for the reward you get is important. Which are the best high return investments in relation to risk? Let’s find out and the answer may surprise you.

If you want high investment returns you need to take a risk but the amount of risk you take for the reward you get is important. Which are the best high return investments in relation to risk?

Let’s find out and the answer may surprise you.

Let’s look at a variety of different investment sectors the facts show that there are good investment managers in all sections but lets look at them for the purpose of our analysis as a broad sector

1. Mutual Funds

Are these a good high return investment? Were told they are but do the facts add up. No they don’t. The overwhelming bulk of mutual funds cannot out perform the S & P Stock index and very few make double digit gains consistently.

Fact is, asset managers promote the ones that do well, then drop them when they don’t and find another with short term performance that’s good, then that’s dropped.

The fact is they make their fees anyway and most people just take the sales hype and end up disappointed.

Their a poor high return investment and best you can expect is double about 10 - 15% and with downside swings of up to 30% so the risk reward is not great.

2. Leveraged funds

These can include futures options and currencies but the facts show that while there are some great performers most put in mediocre performance.

You can get managers in this sector that only make on performance and this is the way to go should you wish to be involved in this sector. Normally you risk you entire investment and the best upside is normally 20% and this is a minority.

3. Real Estate

Although not seen as a high return investment, it beats mutual funds as an investment hands down in terms of risk - reward.

Most people who are careful with location and who hold longer term normally get good solid returns and low risk. Pick the right location and rewards can be stunning.

4. Land

Not as well known as real estate, but its cheaper to buy and can produce gains of similar magnitude or even greater.

Howard Hughes was a big fan of this high return investment as are most of the world’s richest families.

Land is a short supply their not making it anymore! and land bought in prime locations that gets developed produces spectacular gains.

Low risk investments can actually be high return investments

If you take the above 4 high return investments, it’s a fact that land and real estate produce far bigger gains on average than mutual funds or leveraged managed funds and they also do so with low risk.

If you want a high return investment forget the hype and the minority of mutual funds and leveraged funds that make stunning gains most don’t.

Hedge funds are a perfect example. Very few win. Their cloaked in secrecy, in offshore locations most of the time. So, you never know what’s going on and when you find out it’s too late.

High return and low risk

If you take real estate and land the way to turn these into high return investments is simply to pick the right location. If you do this you will have a high return investment with low risk.

Double your investment quickly with low risk!

There are many overseas locations in particular where you can buy easily, cheaply and have stunning potential rewards.

Costa Rica is a well known favourite of American and other foreign investors. Many savvy investors are making double or triple digit returns in just a few years with low risk.

It’s a safe country, investing is easy, its tax efficient and your investment is liquid i.e it can be bought and sold quickly to bank profits.

If you have never thought of land and real estate as high return investments you should.

You can get high returns and low risk in the right locations and Costa Rica is a perfect example of a location that gives you low risk and high reward.

Take a closer look and you may be glad you did.

On how to make money by investing in land and real estate is available FREE which gives you all the facts so you can decide for yourself go here

By sacha tarkovsky Published: 12/1/2006

The Mutual Funds Guru The Best High Return Investments aggressive growth funds, energy mutual funds, income funds, international mutual funds, mutual funds online, no load mutual funds

Mutual Funds: Returns Are Not All

Mutual Funds: Returns Are Not All 5 points that matter while buying MF

5 points that matter while buying MF

More often than not meritocracy of investments is often decided by the returns. Quite simply then a fund generating more returns than the other is considered better than the other. But this is just half the story.

What most of us would appreciate is the level of risk that a fund has taken to generate this return? So what is really relevant is not just performance or returns. What matters therefore are Risk Adjusted Returns.

The only caveat whilst using any risk-adjusted performance is the fact that their clairvoyance is decided by the past. Each of these measures uses past performance data and to that extent are not accurate indicators of the future.

As an investor you just have to hope that the fund continues to be managed by the same set of principles in the future too.

Following are the 5 Points:

1. STANDARD DEVIATION
2. BETA
3. R-SQUARED
4. ALPHA
5. SHARPE RATIO

1. STANDARD DEVIATION

The most basic of all measures- Standard Deviation allows you to evaluate the volatality of the fund.

Put differently it allows you to measure the consistency of the returns.

Volatility is often a direct indicator of the risks taken by the fund. The standard deviation of a fund measures this risk by measuring the degree to which the fund fluctuates in relation to its mean return, the average return of a fund over a period of time.

A security that is volatile is also considered higher risk because its performance may change quickly in either direction at any moment.

A fund that has a consistent four-year return of 3%, for example, would have a mean, or average, of 3%. The standard deviation for this fund would then be zero because the fund’s return in any given year does not differ from its four-year mean of 3%. On the other hand, a fund that in each of the last four years returned -5%, 17%, 2% and 30% will have a mean return of 11%. The fund will also exhibit a high standard deviation because each year the return of the fund differs from the mean return. This fund is therefore more risky because it fluctuates widely between negative and positive returns within a short period.

2. BETA

Beta is a fairly commonly used measure of risk.

It basically indicates the level of volatility associated with the fund as compared to the benchmark.

So quite naturally the success of Beta is heavily dependent on the correlation between a fund and its benchmark. Thus, if the fund’s portfolio doesn’t have a relevant benchmark index then a beta would be grossly inadequate

A beta that is greater than one means that the fund is more volatile than the benchmark, while a beta of less than one means that the fund is less volatile than the index. A fund with a beta very close to 1 means the fund’s performance closely matches the index or benchmark.

If, for example, a fund has a beta of 1.03 in relation to the BSE Sensex, the fund has been moving 3% more than the index. Therefore, if the BSE Sensex increased 10%, the fund would be expected to increase 10.30%.

Investors expecting the market to be bullish may choose funds exhibiting high betas, which increase investors’ chances of beating the market. If an investor expects the market to be bearish in the near future, the funds that have betas less than 1 are a good choice because they would be expected to decline less in value than the index.

3. R-SQUARED

The success of Beta is dependent on the correlation of a fund to its benchmark or its index. Thus whilst considering the beta of any security, you should also consider another statistic- R squared that measures the Correlation.

The R-squared of a fund advises investors if the beta of a mutual fund is measured against an appropriate benchmark.

Measuring the correlation of a fund’s movements to that of an index, R-squared describes the level of association between the fund’s volatility and market risk, or more specifically, the degree to which a fund’s volatility is a result of the day-to-day fluctuations experienced by the overall market.

R-squared values range between 0 and 1, where 0 represents no correlation and 1 represents full correlation. If a fund’s beta has an R-squared value that is close to 1, the beta of the fund should be trusted. On the other hand, an R-squared value that is less than 0.5 indicates that the beta is not particularly useful because the fund is being compared against an inappropriate benchmark.

4. ALPHA

Alpha = (Fund return-Risk free return) - Funds beta*(Benchmark return- risk free return).

Alpha is the difference between the returns one would expect from a fund, given its beta, and the return it actually produces. An alpha of -1.0 means the fund produced a return 1% higher than its beta would predict. An alpha of 1.0 means the fund produced a return 1% lower.

If a fund returns more than its beta then it has a positive alpha and if it returns less then it has a negative alpha. Once the beta of a fund is known, alpha compares the fund’s performance to that of the benchmark’s risk-adjusted returns. It allows you to ascertain if the fund’s returns outperformed the market’s, given the same amount of risk.

The higher a funds risk level, the greater the returns it must generate in order to produce a high alpha.

Normally one would like to see a positive alpha for all of the funds you own. But a high alpha does not mean a fund is doing a bad job nor is the vice versa true. Because alpha measures the out performance relative to beta. So the limitations that apply to beta would also apply to alpha.

Alpha can be used to directly measure the value added or subtracted by a fund’s manager.

The accuracy of an alpha rating depends on two factors:

1) the assumption that market risk, as measured by beta, is the only risk measure necessary;

2) the strength of fund’s correlation to a chosen benchmark such as the BSE Sensex or the NIFTY.

5. SHARPE RATIO

Sharpe Ratio = Fund return in excess of risk free return/ Standard deviation of Fund

So what does one do for funds that have low correlation with indices or benchmarks? Use the Sharpe ratio. Since it uses only the Standard Deviation, which measures the volatility of the returns there is no problem of benchmark correlation.

The higher the Sharpe ratio, the better a funds returns relative to the amount of risk taken.

Sharpe ratios are ideal for comparing funds that have a mixed asset classes. That is balanced funds that have a component of fixed income offerings.

Other related articles refer to: http://prajnacapital.blogspot.com/

By Prajna Capital Prajna Capital Published: 7/25/2008

The Mutual Funds Guru Returns Are Not All the Same aggressive growth funds, energy mutual funds, income funds, international mutual funds, mutual funds online, no load mutual funds

Best Stock Investments

Stock investment is the best way to make your money grow. Here are certain tips on how to select the best stock investments. Read on to know more.

Stock is a share in the ownership of a company. When a private company decides to divide its business and allows the public to be a part of the firm, then it sells shares of ownership through stock offerings. For example, if a company sells one million stocks and you buy one share, then you own one-millionth of that company and vice versa.

When a company sells stocks to the public for the first time, then it is called initial public offering (IPO) or new issue. One of the major reasons of selling stocks is to meet the financial needs of the company for its growth and expansion. If a company plans for expansion and if the bankers of the company feel that borrowing money would be a heavy burden, they look to investors and/or shareholders to finance the growth of the company.

It is the board of directors who take care of the shareholders or the stock holders. Usually, they are elected by the shareholders. The board arranges meetings and makes sure that the interests of the shareholders are being met. In case the company is earning profits, then the board decides on the percentage of profit to be paid to the shareholders and that to be retained for the company’s future growth. Thus, as per the board’s decision, the shareholders get a dividend of the profit.

If you decide to invest your money, then the first and foremost step is to educate yourself about the various options of investment. Let’s see some of the tips on selecting the best stock investments.

Understanding the Stock Market: Stock market is all about unexpected gain and loss. The best stock investments give the highest returns to the shareholders. Hence, before investing in any of the companies that offer stocks, you need to understand the stock market. You can read books on investment tips and seek advice from friends, experienced investors and the stock brokers. Also, the Internet is one of the good sources of information about stock market.

Analyze the Companies: While investing in the stock market, it is very important to examine the best companies in which you can invest. It is better to study and research about the company’s performance, both past and present. Analyze where the company is standing in the present scenario and its future plans. To be on the safer side, you can invest in a company that has a track record of paying high dividend annually to its shareholders. However, many of the researchers are of the opinion that budding companies have better chances of growth and expansion.

Selling Stocks: Selling stocks at the right time is one of the important steps in investment. It is advisable not to sell stocks at the first slight dip in the market. Over a period of time, the stock market will go up. In case you have high dividends; it is better not to withdraw the money, instead invest more by buying stocks of the same. This way you can make the best of your investments. You can consult with a broker and your friends, regarding when and how to sell your stocks.

Mutual Funds: As compared to investing in stock market, investment in mutual funds is less risky. You can diversify your investments in stocks, bonds (debt security), short-term money markets and other finance securities. There is a fund manager who professionally manages the fund. The manager trades the stocks, according to the market value. You can buy mutual funds from a broker, bank or mutual fund family.

There are certain advantages of investing in the stock market or equity market. One of its advantages is the ease of trading; a shareholder can contact a broker or login to his/her electronic trading account and buy or sell stocks in the market. Other advantages include the high rate of return (up to 10% per annum) and lower tax on the interest income (about 15% per annum) as compared to other cash investments that come to about 35% tax. However, investing in the stock market is very risky and you need to be careful. In case, the company that you have invested in is running low, then your investment can become zero. To combat such a problem, you need to invest in a variety of stocks and be patient. There is a saying "higher the risk, the higher the return".

By Ningthoujam Sandhyarani Published: 1/28/2009

The Mutual Funds Guru Top Stock Investments aggressive growth funds, energy mutual funds, income funds, international mutual funds, mutual funds online, no load mutual funds

Sector Fund Rotation System Outperforms the Market

By using a simple sector mutual fund rotation strategy you can beat the market by 10% a year trading Fidelity Select mutual funds once a month.

The overall stock market has had a rough seven years. If you look at the performance of the S&P 500 from 1999 through 2005, you’ll see that it was up about 0.2% compounded annual return, not much better than a savings account, and the Nasdaq 100 has fared even worse. It got there in an interesting way, but overall it basically went nowhere.

For investors looking to improve that performance, what alternatives to index funds or buy and hold investing are there? Sector mutual fund investing, using a rotation strategy has been shown to work by a variety of different newsletters and advisors. Many of the top performing advisory newsletters in the Hulbert Financial Digest use this type of strategy. This is easily done using sector funds, such as the Fidelity Select Funds family.

Here we look at a mutual fund trading system that trades the Fidelity Select Mutual Funds. The Fidelity Select Mutual Funds are a good choice for several reasons:

* Fidelity Select Mutual Funds historically have persistence in their trends so they can be held for the Fidelity imposed minimum 30 day holding period while realizing a return well above that of the market.

* If the funds are held for a 30 day minimum, Fidelity allows unlimited trading with no redemption fees.

* With over 40 Fidelity Select Funds, there is a sector fund is available to track most market sectors. If there is strength in any domestic market sector, you’ll probably capture it using Fidelity Select Funds. The diverse choices include Fidelity Select Energy, Fidelity Select Biotechnology, Fidelity Select Gold, and Fidelity Select Health.

* Fidelity’s minimum investment for the Fidelity Select Funds is only $2500 per fund, so that’s all you need to start. There is no longer a load on the Select funds.

Many Fidelity Select rotation strategies have been published, dating back to the late 1990’s, but this example is one of the simplest to follow. The steps are as follows:

1) Track the 25 day (or 5 week) price change in all Fidelity Select Mutual Funds.

2) Invest in the Select Fund with the highest percentage gain over that 5 weeks.

3) Hold the top Select fund for at least 30 calendar days, to avoid the Fidelity early redemption fees.

4) After 30 days, if the currently held Select Fund is still the top Select fund, continue to hold it. Otherwise, exchange it immediately for the top ranked Select fund.

5) Hold the new Select Fund for 30 calendar days

For the 1999 to 2005 years that the major indices have been almost flat, this sector fund rotation system gained almost 200%, or about 16% per year.

There is one significant weakness to this strategy. It’s drawdown is about the same as the overall market. During the down years of 2000 to 2002 this strategy had a drawdown of almost 50%. Fortunately, it has achieved new all time highs in 2006, but that kinds of drawdown need to be factored in to how much you might want to invest in this or any investment strategy.

As you can see, even a simple sector rotation strategy can give a real performance advantage over buy and hold investing. This simple Fidelity Select Funds trading system is a great example.

John Ruppel is the managing principal for Fundztrader.com. Fundztrader offers model portfolios featuring Fidelity Mutual Funds, Fidelity Select Mutual Funds, and Exchange Traded Funds. More information and a free newsletter are available at http://www.fundztrader.com

By John Ruppel Published: 9/28/2006

The Mutual Funds Guru Rotating Sector Funds System best mutual funds, buy mutual funds, growth mutual funds, mutual fund investing, mutual fund performance