"Educated" Funds

05/05/2006 12:00 am EST


Leonard Goodall

Co-Editor, No-Load Portfolios

Leonard Goodall doesn't travel far for The Money Show Las Vegas. The former president of the University of Las Vegas, now a leading no-load fund authority, makes the area his home. But for his latest fund picks, he looks both north and south of the border.

"We believe most investors should have some foreign holding in their portfolios, diversifying among funds from Europe, Asia, and the Americas. T. Rowe Price Latin America (PRLAX) is a member of our global dollar-cost averaging portfolio. Owning this fund provides a wild ride, so we would caution that it may not be a suitable holding for the typical conservative investor.

"After losing value in 2000-2002, the fund rose 57% in 2003, 38% in 2004, 60% in 2005, and is up 19% so far in 2006. The fund's top holdings include Mexico's America Movil and Wal-Mart de Mexico, and Brazil's Petroleo Brasileiro and Companhia Do Rio Doce. Because of the fund's volatility, we recommend dollar cost averaging over time as the best way to buy.

"Our latest fund focus is Fidelity Canada (FICDX). With a five star rating from Morningstar, the fund invests in the energy and commodity rich economy of Canada. The fund has done well in recent years thank to the strong Canadian economy. The fund rose 6.2% so far in 2006, after a 27.9% gain in 2005, a 23.9% gain in 2004, and a 51.9% gain in 2003. Overall, this fund provides a good way to invest in a country where the economy is heavily based on energy and natural resources. Its largest investments are in the Royal Bank of Canada, Manulife Financial, Bank of Nova Scotia, Encana, and Suncor Energy.

"We also note that based on questions from our readers, many investors have become interested in commodities recently. However, we caution that there is abundant evidence that most individuals with a short-term focus who invest in commodity contracts lose money. In addition, there are many kinds of commodities, from agricultural products to natural resources, to previous metals. As a mutual fund advisory service, we recommend that commodity investments should be made through mutual funds.

"Several funds give the individual investor an opportunity to invest in commodities. Take a look at T. Rowe Price New Era Fund (PRNEX) and Pimco Commodities Real Return Fund (PCRRX), as well as the Oppenheimer Real Asset Fund (QRAAX) . In addition, we note that there are several commodity-related exchange traded funds available. For wide participation in commodities, the DB Commodity Index Tracking Fund (DBC NYSE), based on the Deutsche Bank Liquid Commodity Index, consists of 35% crude oil, 20% heating oil, 12.5% aluminum, 11.25% each for corn and what, and 10% in gold."

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