Will Upgraders Buy Back into Foreign Funds?

September 27, 2012

Europe was one of the strongest performing areas in August, and these funds continued to do well in September. If this continues, Upgraders may be prompted to add foreign funds to their portfolios as early as October.

“We are starting to see European funds rising up the ranks,” FundX CIO Jason Browne told Marketwatch’s Chuck Jaffe last week on Jaffe’s MoneyLife show. “We aren’t quite there yet, but we are starting to see them on our radar, and if that trend continues, we will certainly begin buying into those funds.” (Click here to listen to the MoneyLife show or read a summary on Marketwatch).

Not all areas of the globe are outperforming, Jason noted. He pointed out that Japan, China and emerging markets still are out of favor. Europe also isn’t only area of the market that has shown recent strength: domestic mid-caps have also been doing well.

In this rising market, Jason explained that “the key thing is that you’re participating somewhere, and there are opportunities to do even better.”  He explained that in NoLoad FundX, we’ve been led to “move out of defensive sectors into things that are going to give us more participation.”

In the “Hold It or Fold It” portion of the MoneyLife show, Jason responded to listener questions and explained whether he’d buy, hold or sell utilities funds, ETFs that track the NASDAQ 100, and diversified international and domestic funds.

SPDR Utilities (XLU)  – “XLU has done well because people have been defensive. If this market continues to do well – which is what we see happening –I think there’s a lot of other things that give you a better opportunity. So I would sell into that weakness, but don’t just sell and go to cash. Sell and replace it with something that gives you a little more upside potential.”

SPDR S&P 500 (SPY)  – “If you’re just looking to participate in this market on a broad basis, or to increase your participation…SPY would be a logical buy. It’s not our top pick at the moment, but it’s certain something we’d be comfortably buying. ”

PowerShares QQQ (QQQ) – “It’s been doing phenomenally well this year. We own it and continue to buy it.”

ING Corporate Leaders (LEXCX) – “It has done well, it gives you broad based participation, it’s a fund we own and I would consider it a buy.”

Artio International (BJBIX) – “International funds are coming up our ranks. One distinction is that Artio has a significant amount of its portfolio in Asia, including emerging Asia, and that area continues to be weak from our perspective…I would sell.”

Click here to listen to the full interview.

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