MutualFunds.com provides weekly information (December 5 – December 12) 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.
- Both U.S. and international markets show large gains for the week, indicating signs of strong domestic and global economies.
- Financials continue to maintain their recent uptrend with President Trump expected to loosen banking regulations during his term.
- Municipal bond funds have had over $9.3 billion in total outflows for the last four weeks, with fearful investors moving out of bond funds and the Fed expected to raise rates at this week’s meeting.
- Make sure to check out last week’s edition of the Weekly Roundup to get the whole picture.
– U.S. equities bounced back from the previous week in a roaring fashion. The Dow Jones Industrial Average (DJIA) was up 3.06%, and closes out the week at a record high of 19,757. The S&P 500 recovered and was up 2.08% to 2,260. The NASDAQ had the week’s biggest gains, with a return of 3.59% to 5,444. This shows that investors are still confident in the current status of the economy. The market also seems to favor the tax reformation and fiscal stimulus plans proposed by incoming President Trump. However, U.S. Equity mutual funds reported outflows of -$8.86 billion for the week, suggesting investors may be reallocating to low-cost investments (eg. ETFs) or purchasing individual stocks.
Financials were up the most for the week, showing a sectoral return of 4.86%. With the Fed meeting this week and the expectation that interest rates will rise, financials are bound to benefit the most. Also, with President Trump’s expected plans to loosen regulations of the financial industry, the sector continues to bounce back. Explore mutual funds that invest in the financial sector.
– International markets also bounced back similar to U.S. markets, with the MSCI Developed Index up 2.91% and the MSCI Emerging Index up 2.92%. Japan’s NIKKEI Index was also up 3.10%; however, it remains down 0.20% on a year-to-date (YTD) basis.
– After last week’s huge gains, commodities had little movement, with oil decreasing $0.18 per barrel or -0.34%. The price of gold came down $16/troy ounce or -1.37%. Copper, on the other hand, experienced a minor gain of $0.02/pound or 0.75%.
Be sure to check out important tips on how to invest in the right commodity-based mutual fund.
– Given the high likelihood of a hike in interest rates this week, Treasury bond prices continued to decrease, pushing up yields across all maturities. Yields for the 10-year and 30-year Treasuries grew 7 bps and 9 bps, respectively. Learn how to rebalance your portfolio based on interest rate hikes.
– After last week’s rally, municipal bond prices increased, causing yields to decrease across the board.
The 10-year AAA bond yield decreased by 21 bps and the 30-year AAA bond yield decreased 20 bps from the week before. Municipal fund flows continued the massive outflow trend for the fourth straight week, with over $2 billion for the week and over $9 billion over the last four weeks. Again, investors continued the trend of pulling out of bond funds and into investments not affected by rising interest 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 9, 2016.
|Category||Top Subcategory||MTD Subcategory Return (%)||Top Subcategory Performer||MTD Fund Return (%)||Performance Rationale|
|U.S. Equity Fund||Small Value||14.33%||TDVFX||22.80%||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||Japan Stock||4.85%||BAJAX||4.85%||Fund has 1/3 invested in the U.S., which has done well over the last month. The remainder is invested in cash and international markets.|
|Commodities||Broad Basket||4.00%||GCCUX||8.15%||With commodities down for the month, the fund has been protected by staying in Treasuries but quickly reinvested in oil, which had a strong return the week prior.|
|Taxable Bonds||High Yield||1.43%||FOCIX||13.13%||Fund invests in high-yield bonds and preferred stocks, which increased greatly last week.|
|Municipal Bonds||Muni National Short||-1.00%||USMTX||0.04%||Bond funds with longer durations move to the ultra-short funds to protect them from interest rate fluctuations.|
Performance Snapshot: Top Fund
This fund continues to see strong YTD performance, primarily by having nearly 13% invested in the energy sector, which is up over 27% for the year. The top holding is Texas Pacific Land Trust (TPL), which is up over 166% for the year.
The following table provides the top performing mutual funds on a YTD basis, as of December 9, 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||44.54%||1.00%||28.05%||$ 306||Consumer Cyclical|
|Williston Basin/Mid-North America Stk A||ICPAX||Energy Equities||39.91%||1.44%||22.61%||$ 664||Energy|
|Tortoise MLP & Pipeline Instl||TORIX||Master Limited Partnerships||39.29%||0.99%||37.23%||$ 2,340||Energy|
|Wadell & Reed Energy Y||WEGYX||Energy||38.52%||1.10%||22.42%||$ 243||Energy|
|First Eagle Gold I||FEGIX||Precious Metals||37.51%||1.03%||40.49%||$ 1,028||Basic Materials|
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