Monthly Mutuals Analysis
Dateline: 6/14/99
Before starting today's column, I'd like to advise my readers of two free investment conferences happening in Edmonton and Calgary next week. They're put on by Cambridge House and are free if you pre-register on the Internet. Otherwise they are $25 at the door. The Edmonton Technology Investment Forum happens all day Tuesday, June 22 at the Delta Edmonton South Hotel & Conference Centre. The Calgary Technology Investment Forum happens all day Thursday, June 24 - Telus (Calgary) Convention Centre. Follow the links for agenda and participants. I attended a similar conference in Vancouver earlier this year and had an enlightening and enjoyable time. If you can, get out to these events!
While April showed a clear dominance of Asian and Resource funds, the Top 25 performers for May showed a resurgence in the U.S. small to mid cap funds. Twelve of them made the list. There were also two Canadian small cap funds on the list, the YMG Emerging Companies Fund and the Cote 100 REA-action Fund.
There has been a notable lack of breadth in the broad market advances of the bull market with a small number of large cap stocks excelling while the majority of stocks have lagged. Now the small and mid-caps are playing catch-up and the large caps are stumbling. Whether this is a trend that will continue remains to be seen, but ace stock picker Pat McKeough of The Successful Investor newsletter noted in March that "one of the two groups routinely outperforms the other for years at a time. Then the laggard group simply leapfrogs over the leader, and the race goes on".
But McKeough warns that such stocks must be chosen selectively. Seems some fund managers have been doing so with some success.
Rounding out the Top 25 were three Asian funds (two of them Indian), a health care fund, a science and tech fund, a labour sponsored fund and five - count 'em - five Global Manager Bear Funds.
The Global Manager funds are a product of the Bank of Bermuda and are aimed at the wealthy investor. There are an Index Fund, a Bear Fund and a Geared Fund for each of five different markets, Hong Kong, Japan, Germany, the U.K. and the U.S.. Each requires a minimum investment of $150,000.
The bear and geared funds are also not for the faint of heart as they can be extremely volatile. The bear funds engage in short selling and other bear market hedges and the geared funds are leveraged to double the normal gains of the market. But presumably, if you can afford the funds, you can afford to weather such volatility (and the smarts to know which fund to be in at what time). From their track record it's clear that these are not funds to hold for the long term.
Looking at the Three Month Performance Chart, we see that 21 of the 25 funds recorded a loss for May and are hanging on to their positions from past gains. Most of them continue to be resource, Asian, and Latin American funds.
The Power Performers Report
The number of Power Performers (funds returning better than 20% for each of the one year, two year, three year and five year periods) increased to 16 in May, up from 14 in April. But the number of Super Power Performers (funds returning better than 25% for each of the designated periods) declined by two.
Again there are no Canadian equity funds in our list. All are U.S. equity funds except for two sectoral funds, the Green Line Science and Tech Fund and the Spectrum United Telecom Fund.
Reflecting the unsettled markets of the last month, all but four of the U.S. equity funds declined in May. In fact, five of the Power Performers are showing losses for the Three Month period. The numbers indicate one should take a cautious approach to investing at this time.
Our RRSP Performers are a repeat of April. The NN Can Am, Transamerica Agent Plan and Scotia CanAm Stock Index Fund are the only three RRSP eligible funds meeting our criteria of performing better than 15% in each of the relevant time frames. All of them show losses for May.
Portfolios
Last month we ended our tracking of the portfolios we had established a year and a half earlier. This month we are replacing them with two new portfolios and starting from scratch. Each will have $25,000 to start and will be charted from month to month. The first portfolio will be a Power Performers Portfolio and the second an RRSP Performers Portfolio.
We'll be charting the portfolios against the TSE 300 Index and the Dow Jones Industrial Average.
Marco's Power Performers Index Page
Marco's Power Performers for 1998
Marco's Power Performers for 1997
Marco's Power Performers to May 31, 1999
Marco's RRSP Performers to May 31, 1999
Top 25 Three Month Performers to May 31, 1999
Funds Performing Better Than 15% Annual Compounded Rate Over 15 Years
Funds Performing Better Than 15% Annual Compounded Rate Over 10 Years
Disclaimer: As with all my columns here, I should re-iterate a precaution. I am not a professional financial advisor. I am a financial journalist and editorialist. The views in these columns are my personal opinions. The author may hold interests in a number of the funds mentioned in this article.
Investing (Canada) Notes:
I am now posting my Power Performers and other charts using About.com's standard page format instead of full page charts as I have done before. While this introduces a greater consistency in page appearance, it does not lend itself well to printing for those of you who may have liked to print off our charts. So I am creating a special mailing list and will e-mail our new charts as they appear each month in a format you can print without the ads, headers, links and that picture of my smiling mug. So if you want to get on the list, e-mail me.
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