Mutual Funds Weekly Roundup: December 8

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Coins Placed on Top of Each Other Simulating Growth


Mutual Funds Weekly Roundup: December 8

Brian Mathews Dec 08, 2016

  • 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.

Market Wrap-Up

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

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.

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