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 hit the skids as post-election rally finally loses steam and causes declines in both S&P and NASDAQ.
- With OPEC agreeing to cut production for first time in 8 years, energy prices, especially oil, skyrocket.
- Municipal bond funds continue to see large outflows, with fearful investors moving to other asset classes that won’t be affected by interest rates.
- Make sure to check out last week’s edition of the Weekly Roundup to get the whole picture.
U.S. Equity – U.S. equities were more volatile for the week and showed a recent slowdown of the upward trends from the weeks prior. The Dow Jones Industrial Average (DJIA) was relatively flat for the week, up only 0.10%, and closing out the week at 19,170. The S&P 500 pulled back slightly, finishing down 0.97% at 2,192. The NASDAQ declined the most last week, with a negative return of 2.65% at 5,256. The markets indicate that investors may be selling off gains from the post-election rally and looking for value in the declining bond market prices. Overall, U.S. Equity mutual funds reported outflows of -$1.829 billion for the week.
Energy was the best returning sector, up 2.64% for the week and 25.43% for the year. In an unexpected move, OPEC decided to cut oil production for the first time in 8 years, causing energy prices to soar. Explore mutual funds that invest in the energy sector.
International Equity – International markets remained relatively flat, with the MSCI Developed Index down 0.22% and the MSCI Emerging Index down 0.29%. However, Japan’s NIKKEI Index was up 0.24%.
Commodities – Energy was the week’s best performer, with the price of crude increasing $5.62 per barrel or 11.49% due to the positive output of the OPEC meeting. Metals like gold and copper both showed relatively flat returns, down -$3/troy ounce (-0.25%) and -$0.04/pound (-1.51%), respectively.
Be sure to check our tips on how to invest in the right commodity-based mutual fund.
Taxable Bonds – With the market estimating that the Fed has an almost 100% chance of raising rates in the next few weeks, Treasury yields, barring the 2-year maturities, rose last week.
Yields for the 10-year and 30-year Treasuries grew 0.04 bps and 0.07 bps, respectively. Throughout the week, Fed regional leaders Dudley, Kaplan, Powell and Mester indicated that the economy is showing strong enough momentum for a December rate hike. Learn how to rebalance your portfolio based on interest rate hikes.
Municipal Bonds – The municipal markets saw bond prices decrease even more than taxables, causing yields to skyrocket with interest rate hikes looming in the near future.
The 10-year AAA bond yield increased by 18 bps and the 30-year AAA bond yield increased 20 bps from the week before. Municipal fund flows continued the massive outflow trend for the third straight week, with just over $2 billion for the week and over $7 billion for the month of November. This shows that bond investors are reallocating to investments that will not be negatively affected by rising rates.
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 month-to-date (MTD) fund return generated as of December 2, 2016.
|Category||Top Subcategory||MTD Subcategory Return (%)||Top Subcategory Performer||MTD Fund Return (%)||Performance Rationale|
|U.S. Equity Fund||Small Value||14.10%||CMOVX||24.76%||Small Value continues to rally with the total market. This fund has 23% in Energy, which had a very big week, up 2.64%|
|International Equity||World Stock||1.36%||CAMAX||9.55%||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||3.48%||DBCMX||7.90%||With commodities down for the month, the fund has been protected by staying in Treasuries.|
|Taxable Bonds||Bank Loan||0.58%||HFRZX||1.29%||Fund invests in floating rate securities, which rise as interest rates rise.|
|Municipal Bonds||Muni National Short||-1.54%||TFCAX||0.03%||With ¼ invested in cash and the rest in shorter term issues, this fund is sheltered from interest rates.|
Performance Snapshot: Top Fund
This fund has seen a strong YTD performance, primarily by having nearly 13% invested in the energy sector, which is up over 25% for the year. The top holding is Texas Pacific Land Trust (TPL), which is up over 126% for the year.
The following table provides the top performing mutual funds on a YTD basis, as of December 2, 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.
|Name||Ticker||Category||YTD %||Net Expense Ratio||% of Assets in Top 5 Holdings||Total Assets $ (Millions)||Top Sector Invested|
|Hodges Institutional||HDPIX||Mid Cap Blend Equities||40.14%||1.00%||28.05%||$ 306||Consumer Cyclical|
|First Eagle Gold I||FEGIX||Precious Metals||39.74%||1.03%||40.49%||$ 1,028||Basic Materials|
|Wadell & Reed Energy Y||WEGYX||Energy||38.87%||1.10%||22.42%||$ 243||Energy|
|Williston Basin/Mid-North America Stk A||ICPAX||Energy||38.05%||1.44%||22.61%||$ 601||Energy|
|Tortoise MLP & Pipeline Instl||TORIX||Master Limited Partnerships||35.67%||0.99%||37.23%||$ 2,340||Energy|
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