MutualFunds.com provides weekly information about any material impact on the mutual funds industry due to major economic and corporate events around the world. In addition, performance statistics on the top funds and fund categories are also provided.
- U.S. markets continued to rally during Thanksgiving week and the Dow Jones Industrial Average (DJIA) hit a record high, closing at 19,152 on Friday and up 1.31% for the week.
- Telecom stocks saw the largest weekly gain with expectations that President Trump will expand infrastructure
- Municipal bond funds continued to see major outflows, with investors fleeing under the expectation that interest rates will rise in December.
- Make sure to check out last week’s edition of the Weekly Roundup to get the whole picture.
U.S. Equity – The U.S. stock markets continued to rally during the Thanksgiving holiday and a shortened trading week. The DJIA hit a new high of 19,152 on Friday, up 1.31% for the week and 9.91% year-to-date (YTD). This surge is most likely contributed to a mixture of causes, such as corporate earnings remaining strong and valuations not being overpriced. Plus with interest rates on the rise, investors have little options for investment other than U.S. stocks. The S&P 500 and NASDAQ followed suit, up 1.20% and 1.22%, respectively, for the week. The S&P 500 is up 8.29% and the NASDAQ is up 7.82% YTD.
The telecommunications sector had the week’s best returns with 5.25% and up 16.11% YTD. With President Trump’s plans to expand infrastructure, the telecom stocks are likely to benefit. In this context, you may want to locate mutual funds that invest in telecommunications stocks.
International Equity – International markets rebounded from last week, with the MSCI-Developed Index gaining 1.29% and the MSCI-Emerging Markets Index gaining 1.34%. The Nikkei 225 Index also bounced back with a 2.90% return for the week.
These returns are clearly short-term corrections from the large decline during last week’s global reaction to the presidential win by Donald Trump, who has clearly announced his plans to alter current trade agreements like NAFTA and the Trans-Pacific Partnership (TPP). If the latter materializes, it will have a negative effect on Japan’s trade economy.
Commodities – Energy was significantly up for the week, with the price of crude increasing $0.64 per barrel. On Wednesday, November 30, OPEC met with the non-OPEC participating countries to resolve its past disagreement; thus, maintaining uncertainty over price movements. Gold continued its downward trend from last week and showed negative returns of -$38/troy ounce (-3.17%).
Taxable Bonds – With the last few weeks of decline, taxable bond prices increased. Treasuries yields decreased across the board, except for the 2-year maturities which are the least sensitive to interest rate movements.
Yields for the 10-year and 30-year Treasuries decreased by 1 bps and 4 bps, respectively. The market predicts there is a 100% probability that the Fed will raise interest rates in December’s FOMC meeting. Given this situation, you might be interested to know how to deal with your portfolio when interest rates rise.
Municipal Bonds – The municipal markets saw bond prices continue to decrease and yields increase with the expectations that rates will rise.
The 10-year AAA bond yield increased by 11 bps and the 30-year AAA bond yield increased 8 bps from the week before. Muni bond mutual funds continued to see outflows, with -$2.2 billion in assets leaving this week. This trend shows that muni bond investors are reallocating to investments that will not be negatively affected by rising rates or investments with a low duration. Check out the beginner’s guide to municipal bond funds to learn more.
Monthly Performance Snapshot: Top Fund Category
The following table provides a list of the top performing subcategories for the previous week within the broader categories of the mutual fund industry. In each of those subcategories, we have listed out the top mutual funds based on rolling month return generated as of November 25, 2016.
|Category||Top Subcategory||Avg Monthly Return (%)||Top Subcategory Performer||Fund Ticker||Avg Monthly Return (%)||Performance Rationale|
|U.S. Equity Fund||Small Value||11.34%||Towle Deep Value||TDVFX||19.70%||Small Value continues to rally with the total market.|
|International Equity||World Stock||0.11%||Cambiar Unconstrained Equity Investor||CAMAX||7.60%||Fund has 1/3 invested in the U.S., which has done well over last month. The remaining is invested in cash and international markets.|
|Commodities||Broad Basket||-1.23%||DoubleLine Strategic Commodity||DBCMX||4.23%||With commodities down for the month, the fund has been protected by staying in Treasuries.|
|Taxable Bonds||Ultrashort Bond||0.03%||Palmer Square Income Plus||PSYPX||0.41%||In anticipation of an interest rate hike, ultra-short bonds offer the best protection by being the least sensitive to rate fluctuations.|
|Municipal Bonds||Muni National Short||-1.09%||SEI Tax-Free Conservative Income A||TFCAX||0.14%||With ¼ invested in cash and the rest in shorter-term issues, this fund is sheltered from any major interest rate fluctuations.|
YTD Performance Snapshot: Top Funds
This fund continues to maintain its position as the top YTD performing fund, primarily by owning both the physical gold commodity and gold mining companies. Its second- and third-largest holdings are Fresnillo PLC, up over 80% YTD, and Newcrest Mining Ltd., which is up 51% YTD.
The following table provides the top performing mutual funds on a YTD basis, as of November 25, 2016. Only those funds that are rated 5 stars by Morningstar and that generated YTD return greater than that achieved by the S&P 500 are included.
|Top Fund Name||Fund Ticker||Category||Subcategory||YTD Return of the fund (%)||Net Expense Ratio (%)||% of Assets in Top 5 Holdings||Net Assets $ (Millions)||Top Sector Invested|
|First Eagle Gold I||FEGIX||Precious Metals||Equity Precious Metals||40.26%||1.03%||40.49%||$1,028||Basic Materials|
|Hodges Institutional||HDPIX||Mid Cap Blend Equities||Mid Cap Growth||38.93%||1.00%||28.05%||$306||Consumer Cyclical|
|Tortoise MLP & Pipeline Instl||TORIX||Master Limited Partnerships||Energy Limited Partnership||35.67%||0.99%||37.23%||$2,340.00||Energy|
|Deutsche Latin America Equity Instl||SLARX||International Equity||Latin America Stock||33.29%||1.67%||34.30%||$311.00||Consumer Defense|
|Morgan Stanley Inst Global Dscvry I||MLDIX||World Stock||Global Equities||31.84%||3.09%||40.87%||$20||Industrials|
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