Last month we purchased Fidelity Limited Term Bond (FJRLX) in our model portfolio. Part of our strat...
Some Funds That Should Hold Up Well
08/01/2007 12:00 am EST
Ivan Martchev, editor of the Vital Resource Investor, reviews the performance of several funds in many different areas and suggests several he thinks will outperform.
We have a three- to five-year outlook for the mutual funds we hold, so we don’t try to beat the market every quarter. Our goal is to minimize the variability of returns and build wealth for the long haul.
Our best-performing fund for the quarter was Fidelity Select Energy Portfolio (FSENX), which was up 15.4%. We introduced the fund last year when our prior favorite, RS Global Natural Resources(RSNRX), sold out and decided to convert itself to a load-only fund.
Our other natural resource funds didn’t do much in the quarter. American Century Global Gold (BGEIX) was down 3.9%, while PIMCO Commodity RealReturn Strategy D (PCRDX) was down 2.6%. American Century Global Gold has delivered three-year returns of 22.5% and five-year returns of 20.4%. PIMCO Commodity RealReturn hasn’t moved much due to an absence of big corrections in natural resources that would allow for cheap entry points for new investors.
T Rowe Price Health Sciences (PRHSX) was up 5% in the quarter. The fund has excellent relative performance in the health care category and has beaten the Standard & Poor’s 500 over the three- and five-year periods. So has our long-standing Meridian Value (MVALX) recommendation; its performance is testimony that a good manager should be given the benefit of the doubt, even after a streak of average performance. Investing since the introduction of the fund in the portfolio in May 2001 would have given you an annual return of 11%.
We also hold a collection of open-end funds spanning the Growth and Income [categories]. Guinness Atkinson Asia Pacific Dividend Fund (GAADX) focuses on dividends and long-term growth. Having generated a 22.9% return so far this year, it’s an excellent way to play the Asian markets. Matthews India Fund (MINDX) focuses on long-term growth in the Indian market. With a year-to-date return of 23%, this fund is an excellent complement to GAADX.
Northeast Investors Trust (NTHEX) focuses primarily on corporate bonds and preferred stocks but isn’t restricted to highly-rated companies. It holds a large collection of noninvestment-grade securities, leading to higher yields.
T Rowe Price International Bond Fund (RPIBX) invests in foreign bonds, with at least 65% of their holdings rated AA or better, and allocates 20% of the fund to non-investment-grade foreign bonds. It provides broad exposure to both highly rated companies and emerging markets.
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