Markets were relatively calm in January and the S&P 500 climbed to a six-month high. The U.S. economic news has recently improved, and fears of a double-dip recessions have subsided. Yet, pain from the bursting global debt bubble has overshadowed record corporate profits, reasonable valuations and promises by the Fed to keep interest rates near zero through 2014. After 12 years of paltry returns, however, many investors are staying away from stock funds. Investors sold an estimated $130 billion from stock funds last year, nearly as much as in 2008.
January’s stock market also gains portend well for the year: since the 1950s, the S&P 500 has gained an average of 7.6% per year, but the years that started with a positive January led to a 15.4% average gain, while the years that started with a negative January ended with a -4.2% average loss.
What’s Working
The largest gains in January came from areas of the market that lost most in 2011. Emerging markets, which lost 18% in 2011, jumped 11% in January 2012, and financials, which sank 17% in 2011, gained 8% in January. Strong January performance outside of the U.S. brought double-digit gains to Brazil, China, Germany, India and Russia, but international funds remain low ranked because of steep losses over the past year.
This one-month reversal wasn’t enough to shake up our ranks much. High dividend, equity income, and large cap funds continue to lead in our core Class 3 category, and small-cap funds, both value and growth, lead Class 2’s aggressive stock funds. Class 1 sector fund leadership is concentrated in health care and home construction funds and ETFs, while utilities fell sharply.
Fixed Income
January was a good month for bonds in general. Higher-risk bond funds saw the highest returns. Emerging market debt and high-yield (lower-quality corporate) bonds had the best performance; many funds in those categories gained over 2%. The ever-volatile emerging market local currency bonds (non-dollar-hedged) spiked over 6%.
Although some riskier areas of the bond market have fared better in recent months, our portfolio is well-diversified among corporate and government bonds, and short- and intermediate-term maturities, and these holdings have achieved more dependable returns over time.
Tagged as:
fundx,
monthly market leadership report,
reversal
A Strong Start to 2012
by noloadfundx on February 7, 2012
Markets were relatively calm in January and the S&P 500 climbed to a six-month high. The U.S. economic news has recently improved, and fears of a double-dip recessions have subsided. Yet, pain from the bursting global debt bubble has overshadowed record corporate profits, reasonable valuations and promises by the Fed to keep interest rates near zero through 2014. After 12 years of paltry returns, however, many investors are staying away from stock funds. Investors sold an estimated $130 billion from stock funds last year, nearly as much as in 2008.
January’s stock market also gains portend well for the year: since the 1950s, the S&P 500 has gained an average of 7.6% per year, but the years that started with a positive January led to a 15.4% average gain, while the years that started with a negative January ended with a -4.2% average loss.
What’s Working
The largest gains in January came from areas of the market that lost most in 2011. Emerging markets, which lost 18% in 2011, jumped 11% in January 2012, and financials, which sank 17% in 2011, gained 8% in January. Strong January performance outside of the U.S. brought double-digit gains to Brazil, China, Germany, India and Russia, but international funds remain low ranked because of steep losses over the past year.
This one-month reversal wasn’t enough to shake up our ranks much. High dividend, equity income, and large cap funds continue to lead in our core Class 3 category, and small-cap funds, both value and growth, lead Class 2’s aggressive stock funds. Class 1 sector fund leadership is concentrated in health care and home construction funds and ETFs, while utilities fell sharply.
Fixed Income
January was a good month for bonds in general. Higher-risk bond funds saw the highest returns. Emerging market debt and high-yield (lower-quality corporate) bonds had the best performance; many funds in those categories gained over 2%. The ever-volatile emerging market local currency bonds (non-dollar-hedged) spiked over 6%.
Although some riskier areas of the bond market have fared better in recent months, our portfolio is well-diversified among corporate and government bonds, and short- and intermediate-term maturities, and these holdings have achieved more dependable returns over time.
Tagged as: fundx, monthly market leadership report, reversal