Research Hub

There is no denying that China is “hot.” While buying individual stocks is one way to gain exposure to this rapidly developing nation, mutual funds may provide a more diversified avenue. From owning individual stocks like the ones covered in The Value Line Investment Survey to using an Asian specialist like Matthews Funds, there are a plethora of options to gain exposure to China.

Interest rates are at historical lows. Although one can persuasively argue that rates can still go lower in the near-term, it is unlikely that they will remain this low forever. The current environment is a dilemma for income-oriented investors. Though not a solution, floating rate funds can help provide some consistency.

Mutual fund investors may have more in common than they think. While the objectives of various funds are often very different, the general goal of most mutual fund managers is the same—capital appreciation. In fact, many of the largest U.S. mutual funds hold considerable positions in the same stocks, which means that mutual fund investors could have a stake in some well-known companies without even realizing it.

As pass-through entities, mutual funds must distribute dividends and capital gains to shareholders. These distributions often occur at the end of the calendar year and can, at times, be quite large. Fund shareholders need to be cognizant of these distributions lest they find themselves in a surprising situation.

Despite their long history and wide availability, many investors are unfamiliar with closed-end funds. They differ from their more popular counterpart, mutual funds, but they are a solid option for all types of investors, ranging from the passive variety that tend to lean toward buy and hold investing to those who like to trade more often, and from those looking to diversify their holdings into bonds and other asset classes to investors wishing to increase exposure to a certain geographic region or a particular industry.

With the debt crisis in Europe now seemingly under some control and the Federal Reserve still keeping interest rates low, stocks and bonds appreciated nicely during the three-month period ended September 30, 2010. Indeed, most of the losses sustained in the second quarter were recouped.

We recently wrote an overview of Thornburg Value Fund (TVAFX) that provided a broad look at how co-managers Edward Maran and Connor Browne invest. It’s hard not to “talk shop” when discussing broad investment themes, however, and the discussions that led to that article brought up some intriguing investment ideas. Two that seemed particularly interesting were Transocean (RIG) and Ensco (ESV).

It is very easy to get caught up in the moment.  When reading that statement, it’s likely that the notion of a romantic encounter came to you mind.  But romance isn’t the only situation in which people get carried away. That’s why it’s important for investors to do their research before purchasing an investment, even a mutual fund, to ensure that the relationships they create aren’t made in the heat of the moment. 

Options have their place in an investor’s overall toolkit.  When used judiciously, options can help increase the income generated by a portfolio and provide downside protection to wary investors.  Two funds to examine that use options are Van Kampen Equity Premium Income Fund (VEPAX) and Gateway Fund (GATEX).  Although the news in recent years has highlighted the risks of certain investment strategies, such as options, the headlines shouldn’t dissuade investors from learning more. 

When investors look at purchasing a fund, they often review a fund’s objective and its historical performance.  While both are logical to examine, it is also important to know exactly who it is that is managing the fund, since this person is, ultimately, the one to whom an investor is entrusting his or her money.