Tag Archives: Mutual Funds

4 Ways 'Free' ETF Trading Could Cost You

By Dan Caplinger

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Investors have pumped well over $1 trillion into exchange-traded funds, steadily moving their money out of older-style traditional mutual funds and into this investing world darling. It’s no wonder: Investors prefer the lower costs, tax savings, and greater flexibility that ETFs offer compared to regular mutual funds. And ETF providers have done everything they can to bolster demand for their products.

But even though financial companies are offering free ETF trading to clients, you need to be aware of both the pros and the cons of their offers before you jump in with both feet.

The Flip Side of ‘Free’

One big downside to ETFs is that you’ve traditionally had to pay brokerage commissions to buy and sell shares. But recently, several online brokers have offered no-commission ETF trading, taking away the last obstacle for many investors who want to incorporate ETFs into their investment portfolios.

As attractive as free commissions sound, you have to read the fine print to be absolutely sure about what you’re getting. In particular, here are four things to watch out for with commission-free ETF offers:

1. Not all ETF trading is free. The brokers that offer commission-free ETFs include only certain ETFs on their free lineups. For instance, Vanguard includes its own proprietary ETFs, but if you want to invest in another provider’s ETFs, you’ll have to pay regular commissions. Similarly, Fidelity, TD Ameritrade (AMTD), Schwab (SCHW), and a host of other discount brokers have made arrangements with various ETF providers to offer their ETFs at no commission. But if you stray from their respective lists, ordinary commission charges apply. So if you decide to open a brokerage account based on a broker’s free-ETF offer, make sure that you like the ETFs available at no commission from that broker, or else you’ll be in for a costly surprise.

2. “Free” can turn into “fee.” Many brokers discourage the use of commission-free ETFs for frequent trading by imposing additional restrictions, such as 30-day minimum holding periods or trading limits. If you violate those terms, then you may end up having pay the regular commission after all — or even an extra penalty as a short-term trading fee. If you’re a long-term investor, those fees won’t be a problem. But if you’re expecting to buy and sell ETF shares more frequently, then those programs won’t help you avoid costs.

3. Commission-free doesn’t equal good. In assessing a broker’s free-ETF offerings, make sure that the eligible ETFs meet your quality standards. In particular, what you should watch out for are ETFs with relatively high expenses. Even small differences in ETF expense ratios can add up to thousands of dollars in lost returns over long periods of time, dwarfing the savings from avoiding a commission of $10 or less. Stick with brokers that offer high-quality, low-cost ETFs,

From: http://www.dailyfinance.com/2013/04/16/free-etf-trading-caveats/

Taxes From A To Z (2013): X Is For Mutual Funds

By Kelly Phillips Erb, Contributor

X is for Mutual Funds. I know what you’re thinking: you’re thinking I’ve completely lost my mind this close to Tax Day because the term “Mutual Funds” doesn’t begin with an X. You’re right, it doesn’t: it ends with an X.

From: http://www.forbes.com/sites/kellyphillipserb/2013/04/13/taxes-from-a-to-z-2013-x-is-for-mutual-funds/

Payments to Wealth Advisers Shows Some Funds Aren't 'Fee-Free'

By Reuters

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By Jed Horowitz

At least three wealth management firms that market themselves as objective financial advisers are getting payments for investing their clients’ money in certain mutual funds, a practice that even some of these firms say could create conflicts of interest.

The firms, known as registered investment advisers, are typically paid by clients with fees tied to the growth or contraction of client assets, and not to specific products. But Fidelity Investments and Charles Schwab Corp. (SCHW) are paying these financial advisers as much as 0.25 percent of the assets that their clients put into no-transaction-fee mutual funds.

Such funds are popular with ordinary investors because they don’t have to pay commissions to buy or sell them, although some advisers say they have higher expenses than funds with commissions. Brokers such as Fidelity and Schwab make hundreds of millions of dollars in fees selling funds that they and others manage.

The three wealth management firms receiving product-related fees are Luminous Capital, a division of First Republic Bank Inc. (FRC); Sontag Advisory LLC, a unit of National Financial Partners Corp. (NFP); and PHH Investments Ltd., which specializes in managing retirement income for pilots, a Reuters review of regulatory filings shows.

Millions in Potential Revenue

A fourth firm, Dion Money Management LLC, had also been taking payments from Fidelity, according to a 2012 regulatory filing disclosing its business practices. Last month, however, the Williamstown, Mass.-based firm made a new filing that no longer mentions such payments.

The payments can potentially add millions of dollars of annual revenue for the wealth management firms, but also create incentives for advisers to direct clients to those funds for their own benefit.

Greg Berardi, a First Republic spokesman, said Luminous invests less than 4 percent of client assets in Fidelity’s no-transaction-fee funds. Luminous, founded in 2008 by former Merrill Lynch brokers, is among the 20 largest independent financial advisory firms, with $5.5 billion in client assets, according to its regulatory filings.

“Clients trust us to make investment decisions that are always in their best interests, and that is the way we have always conducted business,” Berardi said. The founders of Luminous, who sold their firm in December to First Republic for $125 million, declined to comment.

Calls to Addison, Texas-based PHH, which markets itself as Retirement Advisors of America, and executives at New York-based Sontag Advisory, weren’t returned. A spokeswoman at Sontag’s parent, National Financial Partners, declined to comment. Dion executives and a spokesman at its parent company, Focus Financial Partners, didn’t return calls seeking comment.

Under securities laws, investment advisers registered with the U.S. Securities and Exchange Commission or state regulators are “fiduciaries” to their clients, which calls for undivided loyalty to the client and full and clear disclosure …read more

Source: FULL ARTICLE at DailyFinance

Americans More Financially Savvy Post-Recession, Survey Shows

By The Associated Press

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By MARK JEWELL

BOSTON — The frugality and investing discipline that the 2008 financial crisis imposed on Americans appear to have led to permanent changes in behavior on money matters, according to a survey by the nation’s second largest mutual fund company.

Spendthrift ways are unlikely to again become as pervasive as they were before the crisis, Fidelity Investments concluded Wednesday in releasing results of its “Five Years After” survey of nearly 1,200 investors.

Positive behaviors that appear to be now entrenched include saving more in 401(k) plans, paying down debt and taking greater care to invest wisely.

“These tend to be very sticky decisions, because you begin to budget and spend around a higher savings rate,” said John Sweeney, an executive vice president on retirement and investing with Boston-based Fidelity. “People are taking control of their financial lives, and control breeds confidence.”

Survey participants were interviewed over two weeks in February, nearly five years after the government-brokered rescue sale of Wall Street firm Bear Stearns to JPMorgan Chase & Co. (JPM). That event, in March 2008, is regarded as a tipping point for more the tumultuous upheavals that followed, including the September 2008 collapse of Lehman Brothers, which the government allowed to fail.

Housing prices plunged, unemployment spiked and stocks tumbled more than 50 percent from the market’s October 2007 high to its March 2009 low. It wasn’t until last month that the Dow Jones industrial average (^DJI) returned to its pre-crisis high.

Key survey findings include:

  • Fifty-six percent reported their financial outlooks changed from feeling scared or confused at the beginning of the crisis to confident or prepared five years later.
  • Survey participants estimated their household had lost 34 percent of the value of their total assets, on average, at the low point of the crisis. Thirty-five percent experienced what they considered to be a large drop in income, and 17 percent said at least one head of their household lost a job.
  • Forty-two percent increased the amounts of regular contributions to workplace savings plans such as 401(k)s, or to individual retirement accounts or health-savings accounts.
  • Fifty-five percent said they feel better prepared for retirement than they were before the crisis. However, among the group of survey participants who reported they continue to feel scared, just 34 percent said they’re better prepared for retirement.
  • Forty-nine percent have decreased their amount of personal debt, with 72 percent having less debt now than they did pre-crisis. Just 31 percent of those who indicated they’re still scared reported that they have reduced debt.
  • Forty-two percent have increased the size of the emergency fund they’ve established to meet large unexpected expenses. Among those self-reporting as scared, only 24 percent have a bigger emergency fund than they had pre-crisis.
  • Seventy-eight percent of those saying they’re prepared and confident said the financial actions they’ve taken are permanent …read more
    Source: FULL ARTICLE at DailyFinance

S&P 500 Hits Record High, Beating 2007 Mark

By The Associated Press

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Richard Drew/AP Traders on the floor of the New York Stock Exchange on Thursday. The Standard & Poor’s 500 index closed at a record high Thursday, beating the mark it set in October 2007, but the index is still shy of its all-time trading high of 1,576.

By CHRISTINA REXRODE

NEW YORK — For the second time in less than a month, the stock market marched past another milepost on its long, turbulent journey back from the Great Recession, toppling another record left over from the days before government bailouts and failing investment banks.

The Standard & Poor’s 500 closed at a new high Thursday, three weeks after another popular market gauge, the Dow Jones industrial average, obliterated its own closing record. The S&P capped its best quarter in a year, rising 10 percent, and the Dow had its best first quarter in 15 years, climbing 11 percent.

The numbers offer more evidence that investors believe the economy is on the mend, said Sam Stovall, chief equity strategist at S&P Capital IQ.

“The low-flying recovery is gaining altitude,” Stovall said, citing a truism among investors that rising stock prices come first, then the economy catches up.

Thursday’s performance was driven by encouraging economic data. Companies are making record profits quarter after quarter. They’re hiring in greater numbers, and the housing market is finally recovering. The economy has expanded for 14 quarters in a row.

The Fed has helped, too. By keeping interest rates near record lows, the central bank has encouraged people to move money out of savings accounts that pay next to nothing and into stocks and other investments.

Investors warned clients not to get overly excited.

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“Getting back to where we were is an important step,” said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. But he cautioned in a note to investors: “Markets are volatile, and if you are a long-term investor you should expect declines.”

On Thursday, the S&P 500 rose 6.34 points, or 0.41 percent, to 1,569.19, beating by four points its previous record of 1,565.15 set on Oct. 9, 2007. The index is still shy of its all-time trading high of 1,576.09.

The index has now recovered all of its losses from the recession and the financial crisis that followed. Investors who put their dividends back into the market have done even better. A $10,000 investment in the S&P back in October 2007 would be worth $11,270.

On any other day, a market gain of six points would go unheralded but not after the turmoil that began in late 2008 and persisted through a slow, sometimes stalled recovery.

The S&P 500 is a barometer that gauges market performance. And while professional investors might scoff at using it to decide when to buy and sell, …read more
Source: FULL ARTICLE at DailyFinance

S&P 500's New High: How'd We Get Here?

By The Associated Press

S&P 500 record high stocks funds

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Richard Drew/AP Traders on the floor of the New York Stock Exchange on Thursday. The Standard & Poor’s 500 index closed at a record high Thursday, beating the mark it set in October 2007, but the index is still shy of its all-time trading high of 1,576.

By MATTHEW CRAFT

NEW YORK — The stock market notched another record. Three weeks after the Dow Jones industrial average blew past its all-time high, the broader Standard & Poor’s 500 index joined it in the history books.

The S&P 500 gained six points on Thursday to close at 1,569.19, topping its previous peak by four points. That previous record stood since Oct. 9, 2007.

The S&P 500 may generate fewer headlines than the Dow, its older stock-index sibling, but it’s the market gauge favored by professional investors. That’s largely because it covers a wider swath of companies — 500 as opposed to 30.

Like the Dow, the S&P 500 has now recovered all of its losses from the Great Recession and the financial crisis that followed. Investors who held on and put their dividends back into the market have fared even better. An investment of $10,000 in the S&P 500 on Oct. 9, 2007, would be worth $11,270 today.

Anyone brave enough to put $10,000 in the S&P 500 at the market‘s bottom on March, 9, 2009, would have $25,200.

Q: What’s driving the stock market to a new high?

A: Since the S&P 500 bottomed out in March 2009, the economy has pulled out of a recession and started growing. Companies are making record profits quarter after quarter, they’re hiring in greater numbers, and the housing market is finally recovering. The economy has expanded for 14 quarters in a row.

The Fed has helped, too. By keeping interest rates near record lows, the central bank has encouraged people to move money out of savings accounts that pay next to nothing and into stocks and other investments.

Pundits often argue that the Fed’s efforts have created the illusion of a strong stock market. But that argument misses the big picture, says Mark Luschini, chief investment strategist at Janney Montgomery Scott. People buy a stock to own a share of the company’s profits, and those profits keep climbing. Earnings for the S&P 500 hit $103 per share last year. That’s up from $84 in 2007 and $61 in 2009.

“This isn’t all smoke and mirrors,” Luschini says. “Corporate profits are at all-time highs.”

Q: What about inflation? How does that affect the record?

A: When inflation is taken into account, the S&P 500 is still far from its peak. On March 24, 2000, the index hit 1,527. With inflation added to it, that peak works out to 2,065, according to calculations from JPMorgan Chase.

Q: The Dow just hit a record three …read more
Source: FULL ARTICLE at DailyFinance

5 Offensive and Defensive Funds to Strengthen Your Portfolio

By Dan Caplinger

bull market stocks offensive defensive funds

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Richard Drew/AP

Investors are getting more excited about the stock market now that it has fully recovered from the financial crisis and started to set new record highs. But if you’re looking to invest now, you have to protect yourself from the possibility that the long bull market could reverse itself.

It’s always tough both financially and psychologically to recover from immediate losses on investments you just bought, so taking steps to avoid big losses is well worth the effort.

With that goal in mind, here are five exchange-traded funds that can strengthen your portfolio against the threat of a possible stockmarket decline while still giving you exposure to further gains if the bull market continues.

iShares MSCI USA Minimum Volatility (USMV)
This ETF seeks out stocks that tend to rise and fall more gently than the overall stock market. With a concentration on health-care stocks like Eli Lilly & Co. (LLY) and consumer-oriented stocks like cereal giant General Mills Inc. (GIS), the iShares ETF focuses on stocks with defensive characteristics that hold up well under any economic environment. That won’t keep the fund from losing money in a falling stock market, but it should help reduce the extent of your losses. And with low costs of just 0.15 percent annually, the ETF doesn’t charge a ton to give you that protection.

PowerShares S&P 500 Low Volatility (SPLV)
Like the iShares ETF above, this fund focuses on low-volatility stocks in defensive industries. But the mix of investments in the PowerShares ETF is different, as it concentrates largely on utility stocks, which make up more than 30 percent of the fund’s portfolio right now. Utility giants Southern Co. (SO) and Consolidated Edison Inc. (ED) provide strong dividend income, and their ability to rely on regulated income from millions of utility customers gives them security even when the economy starts to falter. The fund’s costs of 0.25 percent per year are a bit higher than the iShares ETF but are still reasonable for ETFs generally.

PowerShares S&P 500 BuyWrite (PBP)
At first glance, this ETF looks a lot like a typical index-tracking fund, owning Apple Inc. (AAPL), ExxonMobil Corp. (XOM), and many of the other big companies in the S&P 500. But the twist this ETF uses is to write covered call options against that stock, boosting income at the expense of giving up some of the upside in its stock holdings. During bull markets, that strategy underperforms the overall market, but it produces more favorable results when stocks decline. With expenses of 0.75 percent, the strategy is a bit pricey, but it’s still an interesting way to protect against the full impact of a downturn.

iShares S&P Preferred (PFF)
Stocks come in two flavors: common and preferred. …read more
Source: FULL ARTICLE at DailyFinance

Despite Stock Surge, Money Still Flowing Into Bonds

By The Associated Press

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Market pros call it the Great Rotation. That’s the long-awaited scenario when investors take their money out of bonds and sink it into stocks.

It was the buzzword this month when the Dow Jones industrial average reached a record high. The idea was that investors were confident enough in the economy to shed their financial crisis fears and leave the safety of bonds.

But it’s not happening.

Money keeps flowing into bonds. Industry consultant Strategic Insight says U.S. bond mutual funds have attracted $64 billion in cash in the first two months of the year, just below last year’s pace of $68 billion over the same period.

Stock mutual funds had net deposits of $76 billion through February, according to the consultancy. While that is up sharply from $14 billion a year earlier, the cash for stocks is not coming at the expense of bonds, according to more recent snapshots of investment flows.

Instead, investors are withdrawing from money-market funds, which are often used as a parking spot for cash, according to EPFR Global.

“The expectations of a big exodus from bonds are way overblown,” says David Santschi, CEO of TrimTabs Investment Research, a fund-tracking firm.

A stock market crash and recession have made bonds especially appealing since 2008, when the nation was in the throes of the financial crisis. The abundance of buyers has pushed bond prices up and sent yields lower, reducing interest payments to investors.

Even with low yields, bonds will continue to attract retiring baby boomers and others who want reliable income for daily expenses. The yield on the 10-year Treasury note – a benchmark – is hovering under 2 percent. Other types offer higher yields. Investment-grade corporate bonds yield 3 percent and riskier “junk” bonds yield just under 6 percent.

Money-market funds, meanwhile, yield 0.02 percent.

Still, the Dow’s record surge is drawing more attention to stocks.

The blue-chip index broke through its all-time high March 5 and kept climbing. It’s up nearly 11 percent this year and 122 percent from its bottom in March 2009. The broader Standard & Poor’s 500 index is up 9 percent and is close to breaking its own record.

Investors added $8 billion to U.S. stock funds and exchange-traded funds in February. And they’re putting in more cash this month, as $12 billion flowed into stock funds and ETFs through Tuesday, according to EPFR Global.

Bond funds, including ETFs, have pulled in nearly $8 billion this month.

Much of the money flowing into stocks and bonds has come out of money-market funds. About $32 billion has been pulled out of money funds this month, according to EPFR Global.

Withdrawals that didn’t go directly into stock or bond mutual funds could have gone into bank accounts, covered daily expenses or been used for other needs. Investors also …read more
Source: FULL ARTICLE at DailyFinance

Waddell & Reed Financial, Inc. Declares Quarterly Dividend and Announces Date of First Quarter Earni

By Business Wirevia The Motley Fool

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Waddell & Reed Financial, Inc. Declares Quarterly Dividend and Announces Date of First Quarter Earnings Release

OVERLAND PARK, Kan.–(BUSINESS WIRE)– The Board of Directors of Waddell & Reed Financial, Inc. (NYS: WDR) approved a quarterly dividend on its Class A common stock of $0.28 per share payable on May 1, 2013 to stockholders of record as of April 10, 2013.

Waddell & Reed Financial, Inc. will announce first quarter 2013 earnings before trading begins on the New York Stock Exchange, Tuesday, April 23, 2013, followed by a conference call at 11:00 a.m. Eastern. To listen to this call live on the internet, visit our Web site at www.waddell.com. A replay will be made available shortly after the conclusion of the call and accessible for seven days.


About the Company

Waddell & Reed, Inc., founded in 1937, is one of the oldest mutual fund complexes in the United States, having introduced the Waddell & Reed Advisors Group of Mutual Funds in 1940. Today, we distribute our investment products through the Waddell & Reed Wholesale channel (encompassing broker/dealer, retirement, and registered investment advisors), our Advisors channel (our network of financial advisors), and our Institutional channel (including defined benefit plans, pension plans and endowments, and our subadvisory partnership with Mackenzie in Canada).

Through its subsidiaries, Waddell & Reed Financial, Inc. provides investment management and financial planning services to clients throughout the United States. Waddell & Reed Investment Management Company serves as investment advisor to the Waddell & Reed Advisors Group of Mutual Funds, Ivy Funds Variable Insurance Portfolios and InvestEd Portfolios, while Ivy Investment Management Company serves as investment advisor to Ivy Funds. Waddell & Reed, Inc. serves as principal underwriter and distributor to the Waddell & Reed Advisors Group of Mutual Funds, Ivy Funds Variable Insurance Portfolios and InvestEd Portfolios, while Ivy Funds Distributor, Inc. serves as principal underwriter and distributor to Ivy Funds.

Waddell & Reed Financial, Inc.
Nicole McIntosh-Russell, 913-236-1880
VP, Investor Relations

KEYWORDS: …read more
Source: FULL ARTICLE at DailyFinance

Wasatch Funds Received 2013 Lipper Awards in Four Categories

By Business Wirevia The Motley Fool

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Wasatch Funds Received 2013 Lipper Awards in Four Categories

Wasatch Emerging Markets Small Cap Recognized for the Second Year in a Row

SALT LAKE CITY–(BUSINESS WIRE)– Wasatch Funds announced today that four of its funds received a total of six 2013 Lipper Awards, which recognize mutual funds that deliver consistently strong risk-adjusted performance relative to peers.

“These awards highlight the strength of our in-depth research to find what we believe to be the best growth companies anywhere in the world,” said Gene Podsiadlo, Director of Mutual Funds. “We started our expansion beyond U.S. stock funds in 2000. So it’s gratifying to see that of our four award-winning funds, three were in international or global categories.”

The four Wasatch Funds that received recognition were:

  • Wasatch Emerging Markets Small Cap Fund (WAEMX) was honored as #1 over both three years and five years ending December 31, 2012 among 308 and 219 emerging markets funds, respectively. The Emerging Markets Small Cap Fund was previously recognized in 2012 for its three-year performance ending December 31, 2011. Portfolio Managers Roger Edgley and Laura Geritz invest in small companies, many of which are meeting home-country consumer needs in emerging markets. The Fund is closed to new investors, though existing investors, financial advisors and retirement-plan sponsors with established positions continue to have access to the Fund.
  • Wasatch World Innovators Fund (WAGTX) was also recognized as #1 over both three years and five years ending December 31, 2012 among 144 and 72 global multi-cap growth funds, respectively. The World Innovators Fund seeks to find the most-innovative growth companies worldwide, and is managed by Sam Stewart and Josh Stewart.
  • Wasatch International Growth Fund (WAIGX) received the Lipper Award for #1 performance over three years ending December 31, 2012 among 111 international small/mid-cap growth funds. The International Growth Fund invests in small-cap growth companies domiciled in developed and emerging markets outside of the U.S. The Fund is managed by Roger Edgley, who also received the Lipper Awards for the Wasatch Emerging …read more
    Source: FULL ARTICLE at DailyFinance

Value Line, Inc. Announces Third Quarter Earnings

By Business Wirevia The Motley Fool

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Value Line, Inc. Announces Third Quarter Earnings

NEW YORK–(BUSINESS WIRE)– Value Line, Inc., (NASDAQ: VALU) reported results for the third fiscal quarter ended January 31, 2013. The Company’s quarterly report on Form 10-Q has been filed with the SEC and is available on the Company’s website @www.valueline.com/About/corporate_filings.aspx.

During the nine months ended January 31, 2013, the Company’s net income of $5,095,000, or $0.52 per share compares to net income of $5,835,000, or $0.59 per share, for the nine months ended January 31, 2012. Net income for the third quarter of fiscal 2013 of $1,747,000, or $0.18 per share compares to net income of $1,844,000, or $0.19 per share, for the third quarter of fiscal 2012. Income before income taxes, which is inclusive of the non-voting revenues and non-voting profits interests from EULAV Asset Management (“EAM”), was $8,080,000 for the nine months ended January 31, 2013, as compared to $9,384,000 for the nine months ended January 31, 2012. Shareholders’ equity of $32,857,000 at January 31, 2013 compared favorably to shareholders’ equity of $32,699,000 at January 31, 2012. As of January 31, 2013, retained earnings were $32,272,000 and cash and short term liquid assets were $13,895,000, respectively.

Value Line, Inc. is a leading New York based provider of investment research. The Value Line Investment Survey is one of the most widely used sources of independent equity investment research. Value Line also publishes a range of proprietary investment research in both print and digital formats including research in the areas of Mutual Funds, Options and Convertible securities. Value Line‘s acclaimed research also enables the Company to provide specialized products such as Value Line Select, Value Line Special Situations, and copyright data, distributed under copyright agreements for fees, including certain proprietary ranking system information and other proprietary information used in third party products. Investment Management services are provided through its substantial non-controlling and non-voting interests in EULAV Asset Management, the investment adviser to The Value Line Family of Mutual Funds. Value Line‘s products are available to individual investors by mail, at www.valueline.com or through 1-800-VALUELINE, while institutional-level services for professional investors, advisers, corporate, academic, municipal and legal libraries are offered at www.ValueLinePro.com and at 1-800-531-1425 or 1-800-634-3583.

Cautionary Statement Regarding Forward-Looking Information

This report contains statements that are predictive in nature, depend upon or refer to future events or conditions (including certain projections and business trends) accompanied by such phrases as “believe”, “estimate”, “expect”, “anticipate”, “will”, “intend” and other similar or negative expressions, …read more
Source: FULL ARTICLE at DailyFinance

Despite Surge in U.S. Stock Prices, Investors Remain Cautious

By The Associated Press

investors cautious stocks

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Five and a half years after the start of a frightening drop that erased $11 trillion from stock portfolios, the Dow Jones industrial average has regained all the losses suffered and reached a new high. (Richard Drew/AP)

By MARK JEWELL

BOSTON — The Dow Jones industrial average continues to set new records but average investors are still proceeding with caution.

While they added to U.S. stock funds in the first two months of the year, they put larger amounts into bonds and funds investing primarily in foreign stocks, according to mutual fund industry consultant Strategic Insight.

Investors recognize “that it’s necessary to spread one’s risk and wealth creation aspiration broadly and globally,” said Avi Nachmany, research director with the New York-based firm.

Net deposits into stock and bond mutual funds, both foreign and U.S., totaled $140 billion through the first two months of 2013, the firm said on Tuesday. That matches the record total for the first quarter of 2007. The year-to-date total for funds investing in U.S.-issued and foreign bonds is $64 billion. For U.S. and foreign stock funds, the total is $44 billion.

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For February, a net $6 billion was deposited into U.S. stock funds. While that was down from $26 billion the previous month, it represents a shift from 2012, when withdrawals exceeded deposits over the final 10 months of the year. In fact, cash had been pulled out of U.S. stock funds for six years in a row.

This year’s figures suggest that investors are beginning to become comfortable with stocks again following the financial meltdown and market plunge of 2008-2009.

Deposits into stocks helped push the Dow toward a record reached on March 5. And the index has climbed higher every day since. The Standard & Poor’s 500 index has risen nearly 9 percent this year and is just short of its own record.

Investors have been encouraged by strong fourth-quarter earnings reports, and by the Jan. 1 agreement between Congress and the White House to avert the worst effects of the so-called “fiscal cliff.”

Here are more details about how investors moved their money in February, according to Strategic Insight:

FOREIGN STOCK FUNDS: A net $22 billion was deposited into funds primarily investing in foreign stocks, matching the previous month’s total.

BOND FUNDS: Net deposits of $22 billion in February fell from $42 billion in January. Last month’s total came mostly from taxable bond funds. Those funds, which primarily invest in corporate bonds, attracted almost $20 billion. Nearly $3 billion was deposited into municipal bond funds, which invest in bonds issued by state and local governments. Net deposits into bond funds have topped $1 trillion since the 2008 financial crisis, including more $300 billion last year. Bonds typically generate smaller long-term returns than stocks, but with less chance of short-term losses.

EXCHANGE-TRADED FUNDS: …read more
Source: FULL ARTICLE at DailyFinance

Why I Love McDonald's And Avoid AIG

By David Trainer, Contributor

The head of Ronald McDonald (Image credit: AFP/Getty Images via @daylife) McDonald’s Corporation (MCD) is one of my favorite stocks held by large-cap value ETFs and mutual funds and earns my very attractive rating. MCD has grown its after-tax cash flow (NOPAT) by 9% compounded annually since 1998. Its return on invested capital (ROIC) has increased every year since 2002. McDonald’s current share price of ~$94.60 gives it a price to economic book value ratio of 0.9, which means the market is currently predicting a permanent 10% decline in NOPAT for MCD. Such a large decline seems unlikely for a company that has not experienced even a minor decline in NOPAT for a decade. American International Group (AIG) is one of my least favorite stocks held by large-cap value ETFs and mutual funds and earns my very dangerous rating. AIG has an ROIC of only 1%, while its weighted average cost of capital (WACC) is 10%, meaning it would need to grow ROIC by over ten times its current level to earn positive economic earnings. Instead ROIC is declining, driven by a 75% decrease in NOPATlast year. In fact, AIG has not earned positive economic earnings since before 1998. AIG’s current share price of ~$38.20 means the market is expecting 20% growth in NOPAT compounded annually over the next 10 years. This expectation seems overly optimistic for a company with a declining NOPAT and no track record of economic profitability. The large-cap value style ranks second out of the twelve fund styles as detailed in my Style Rankings for ETFs and Mutual Funds report. Special Offer: Daily stock picks from Forbes Dividend Investor are up 12.6% vs. 8.0% for identically timed buys of the S&P 500 index from July 11, 2012 through February 14. Average yield on buys is 5.8%. Click here for a membership offer from Steve Forbes. Figures 1 and 2 show the five best and worst-rated ETFs and mutual funds in the style. The number of holdings varies widely (from 22 to 1426), which creates drastically different investment implications and ratings. The best ETFs and mutual funds allocate more value to attractive-or-better-rated stocks than the worst, which allocate too much value to neutral-or-worse-rated stocks. WisdomTree Dividend ex-Financials Fund (DTN) is my top-rated large-cap value ETF and FundVantage Trust: EIC Value Fund (EICIX) is my top-rated large-cap value mutual fund. Both earn my attractive rating. PowerShares RAFI Fundamental Pure Large Value Portfolio (PXLV) is my worst-rated large-cap value ETF and Ivy Funds: Ivy Value Fund (IYVBX) is my worst-rated large-cap value mutual fund. Both earn my dangerous rating. Note that 417 out of the 1723 stocks (over 44% of the assets) in the style get an attractive-or-better rating. However, only six out of 39 large-cap value ETFs (less than 29% of total net assets) and 15 out of 728 large-cap value mutual funds (less than 2% of total net assets) get an attractive-or-better rating. It almost seems as if mutual fund managers are trying to avoid the good stocks. Only six ETFs and 15 mutual funds in the large-cap value style allocate enough value to attractive-or-better-rated stocks to earn an attractive …read more
Source: FULL ARTICLE at Forbes Latest

Better Off Buying Individual Utes Than Utility Sector ETFs

By David Trainer, Contributor

Investors should not buy any utilities ETFs or mutual funds because none get an attractive-or-better rating in my  Sector Rankings for ETFs and Mutual Funds. If you must have exposure to this sector, you should buy a basket of attractive-or-better rated stocks and avoid paying undeserved fund fees. Active management has a long history of not paying off. …read more
Source: FULL ARTICLE at Forbes Latest