4 Funds to Tackle the Rebound

08/29/2011 10:30 am EST

Focus: ETFS

Jim Lowell

Partner & Chief Investment Officer, Adviser Investments

Despite the somber talk of double-dip recession and a deeper market retracement, the picture is bright, and by the end of the year we could be up smartly, writes Jim Lowell of Forbes ETF Advisor.

The markets have continued to demonstrate both relative strength and positive resilience in the face of heated political snafus here and globally.

Of course, the weighty question of whither goes the markets from here has become an even more burdensome one, thanks to political rather than economic interests. What else is new?

I continue to think we’ll net a 10% to 15% gain by year-end, based on fundamentals that exhibit earnings growth rather than contraction. I also continue to think it will be a hard slog from here to there.

At the outset of this year, I talked about how we’d likely see a double dip in the housing market and a stall in the jobs market. That’s where we’re at, but where are we heading?

It’s doubtful that we’ll see the salad days of full employment anytime soon, but that doesn’t mean we won’t see a turn for the better down a not-so-distant road.

Also, as I have said before, just because our jobs market has stalled doesn’t mean there aren’t areas on the globe where the job market is booming. Thinking globally and investing locally, through mega-cap multinationals with goods and services that newly minted consumers crave, remains a smart long-term play.

Speaking of multinationals, we know the Pacific Rim has become a synonym for "growth." While China has been doing what it said it would do, slowing its growth (or trying to), there’s no question that stronger growth resides where traders—from spices to whales—have quested for it.

The China trade is nothing new; in fact New England was built upon it. As I look out over the next decade or two, it’s hard to argue against the view that growth will continue at a stronger clip there as compared to moribund Europe and slower growth here.

We’ve got a fleet of options to engage in such trades. One of my current favorites remains Fidelity Mega Cap (FGRTX); our multinationals stand the best chance to return the most wealth relative to the least risk.

Keeping a portion of your powder dry will better enable you to stay the intermediate-term course with your core investments. While stocks have rarely been a better value compared to bonds, confidence has rarely been lower in the prospects for future growth.

Still, if companies can make money in this environment, investors can, too.

Other tactical opportunities:

  • Fidelity Cash Reserves (FDRXX) to cushion the blows of re-deflating momentum, while keeping powder dry for the buying opportunities that a pull back could provide.
  • iShares Emerging Market Bond (EMB) for bargain-basement emerging-market bond hunting.
  • SPDR Global Titans (DGT) to take a balanced approach to imbalanced times.

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