THE SEcond QUARTER 2015 QUARTERLY MUTUAL FUND UPDATE – Rising Yields Help Cause Mediocre Returns

Posted on July 27, 2015 | Quarterly Mutual Fund Update

The second quarter was very mixed, at best, for many mutual funds. The average domestic large-cap stock fund was essentially flat, with the category average rounding to 0.0%. Mid-cap stock funds fell, on average, while small-cap stock funds averaged modest gains. Bond funds were mostly down as yields rose. Higher interest rates also dragged down real estate and utility stock funds.

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THE First QUARTER 2015 Quarterly Mutual Fund Update – Health Care Dominates, as Does the Strong Dollar

Posted on April 20, 2015 | Quarterly Mutual Fund Update

Investor-Update

Health care was the top-performing fund category for the first quarter of 2015, jumping 11.0%, more than double the gain of the second-ranked category—consumer discretionary—which was up 4.9%.

All five of last quarter’s top-performing sector funds are in the health care sector, paced by Fidelity Select Biotech (FBIOX) and Rydex Biotechnology (RYOIX). These two funds have similar portfolios, sharing seven of their 10 top holdings. The weightings differ, however: Fidelity Select Biotech allocates more to Gilead Sciences (GILD) than Rydex Biotechnology does, for instance. Since biotechnology stock prices are significantly influenced by company-specific news, how a particular fund weights its portfolio directly impacts its performance.

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The Fourth Quarter 2014 issue of QMFU is now available on-line.

Posted on January 23, 2015 | Quarterly Mutual Fund Update

Investor-Update

“A Reversal of Fortunes” — The second half of last year marked a reversal of fortune for certain fund categories.

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The Third Quarter 2014 issue of QMFU is now available on-line.

Posted on October 20, 2014 | Quarterly Mutual Fund Update

Investor-Update

“Three Big Changes” — We have three big changes to share with you in this quarter’s update.

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How Should PIMCO Fund Shareholders React to the Departure of Bill Gross?

Posted on September 26, 2014 | Investing, Quarterly Mutual Fund Update
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“Bond king” Bill Gross is leaving PIMCO, a company he co-founded, to join Janus Capital Group (JNS). Our mutual fund guide shows Gross as the lead manager on eight PIMCO mutual funds. Our exchange-traded fund (ETF) guide shows Gross as the lead manager on one PIMCO ETF. The Closed-End Fund Association’s website shows Gross managing two close-end funds. It is possible that there are institutional funds that Gross manages as well. A list of funds managed by Gross that are readily available to individual investors is displayed below.

If you own shares in a PIMCO fund managed by Gross, the big question is what should you do now? In situations when a manager leaves, the best move can be to sit tight and monitor the situation. If the fund(s) still meets your criteria for buying it, then don’t make a kneejerk reaction. Rather, see who takes over the fund and how that manager (or group of managers) performs relative to their category peers. Though likely to be less outspoken, the new manager(s) may prove to be as talented as or even more talented than Gross. They could also be worse. Until actual results begin to appear, nobody knows with any certainty how the funds will perform.

I realize that the advice to sit and monitor the situation can seem tough to follow. If you are uncomfortable doing so, go through the data in our fund guides. Look at the long-term performance of comparable funds, paying attention not only to the recent top performers, but also to those funds that have been able to best their peers over several years without experiencing considerably higher levels of volatility in their year-by-year returns. When doing this, be aware that bond market conditions going forward are likely to be different than they have been over the last five or 10 years. Pay attention to manager tenure, since the returns of a past manager don’t tell you how the new manager will perform. Don’t forgot to review the expense ratios as well, since every dollar spent on fees is a dollar you will never see again.

PIMCO Mutual Funds Managed by Bill Gross:

  • PIMCO Fundamental IndexPLUS Absolute Return (PIXDX)
  • PIMCO StocksPLUS Absolute Return (PSTDX)
  • PIMCO Small Cap StocksPLUS Absolute Return (PCKDX)
  • PIMCO StocksPLUS Absolute Return Short Strategy D (PSSDX)
  • PIMCO Low Duration (PLDDX)
  • AMG Managers Total Return Bond (MBDFX)
  • PIMCO Total Return (PTTDX)
  • PIMCO Unconstrained Bond (PUBDX)

PIMCO ETFs Managed by Bill Gross:

  • PIMCO Total Return ETF (BOND)

Closed-End Funds Managed by Bill Gross:

  • PIMCO Corporate & Income Opportunity Fund (PTY)
  • PIMCO High Income Fund (PHK)


The Second Quarter 2014 issue of QMFU is now available on-line.

Posted on July 23, 2014 | Quarterly Mutual Fund Update

Investor-Update

“Falling Yields Help Bonds and Emerging Markets” — Bond yields continued to fall last quarter, with yields on the benchmark 10-year Treasury note ending June at 2.52%.

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The First Quarter 2014 issue of QMFU is now available on-line

Posted on May 16, 2014 | Quarterly Mutual Fund Update

What Was Down Is Now Up

Two of last year’s worst-performing categories ranked among the first quarter’s top performers. Whether it was a reversion to the mean or a temporary blip within a long-term downtrend remains to be seen, but shareholders of precious metals funds and government long-term bond funds likely welcomed the reprieve. The average precious metals sector fund gained 11.3% in the first quarter after falling by 30.8% last year. The average long-term government bond fund rebounded by 7.1% during the first three months of 2014 after falling 5.5% in 2013.

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The Third Quarter 2013 issue of QMFU is now available on-line

Posted on October 21, 2013 | Quarterly Mutual Fund Update

Third Quarter Similar to the First

The third quarter bucked its reputation for being the three-month period with the worst market performance for stocks. Rather, gains were realized by stock funds of all stripes and colors, though the magnitude of the gains increased as market capitalization decreased.

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The Second Quarter 2013 issue of QMFU is now available on-line

Posted on July 24, 2013 | Quarterly Mutual Fund Update

Bond Funds Fall on Fed Uncertainty

Uncertainty about U.S. monetary policy was a key theme during the second quarter. Yields on the benchmark 10-year Treasury note rose from 1.63% on May 2, 2013, to 2.48% on June 30, 2013, over concerns that the Federal Open Market Committee would begin to curtail its bond-buying program sooner than expected. This speculation steepened the yield curve, with long-term rates rising by a greater magnitude than short-term rates.

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The First Quarter 2013 issue of QMFU is now available on-line

Posted on April 29, 2013 | Quarterly Mutual Fund Update

The First Quarter’s Bull Run

Investors in stock funds were singing The Cars’ famous tune, “Let the Good Times Roll,” last quarter. U.S stocks enjoyed their best start to a year since 1998. Several market benchmarks reached new record highs, including the Dow Jones industrial average and the S&P SmallCap 600 index. The widespread gains resulted in 10 domestic stock fund categories posting average first-quarter gains of 10% or more.

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