Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 3
In the message above this (#17140 at http://boards.fool.com/Message.asp?mid=27801769) clearbranch said:

I am underwhelmed by all of the mutual funds I have looked at in the last 4 years. If ANY of them have made a (significant)profit I would be surprised.

This got me thinking (which is always dangerous). I went to Morningstar and ran a screen. The message specifies "all" mutual funds, so I screened for ALL stock funds, domestic and international. To make it "Foolish" I specified that the funds must have no sales load, and be open to new investment, at a minimum purchase of $3500 or less.

I tinkered with the numbers to get a list manageable for posting here, finally arriving at these performance criteria:
YTD return > 24%
5 year return > 12%
3 year return > 6%
(I hope somebody appreciates the mathematical symmetry of those figures <g>). Anyway, I think most folks would agree, these results would represent "significant profit" for somebody who invested in the past 4 years -- depending on the specific date that they bought in, of course. The winners?

Columbia Greater China Z LNGZX
Dreyfus Greater China I DPCRX
Fidelity Advisor Emerging Asia FERIX
Fidelity China Region FHKCX
Ivy Pacific Opportunities Y IPOYX
Matthews China MCHFX
Matthews Pacific Tiger MAPTX
T. Rowe Price New Asia PRASX

Yes, all are Pacific/Asia ex-Japan Stock funds. If ever a person wanted to prove a point about the value of portfolio diversification and international investment, this might do it.

But I was still curious (again, dangerous) so I changed the screen to exclude all international stock funds. I still kept domestic stock funds and this time opened it up to all taxable bond funds. To get any results, I had to "lower the bar" of performance -- but even so, all these funds made money. The lower requirements for this screen were:

YTD return >6%
3 year return > 6%
5 year return > 6%

Once again, very symmetrical with the base-6 math. And everybody knows, when it comes to investment returns, six is the new twenty.

Here are the winners, with name, ticker and category listed:

Delaware Diversified Income In DPFFX Intermediate-Term Bond
Dreyfus/Standish Global Fixed SDGIX World Bond
Dreyfus/Standish International SDIFX World Bond
Fidelity Advisor Emerging Mark FMKIX Emerging Markets Bond
Harbor Bond Instl HABDX Intermediate-Term Bond
ING PIMCO Total Return Bond S IPCSX Intermediate-Term Bond
MFS Emerging Markets Debt I MEDIX Emerging Markets Bond
PIMCO Total Return D PTTDX Intermediate-Term Bond
Target Intermediate-Term Bond TAIBX Intermediate-Term Bond
Target Total Return Bond TATBX Intermediate-Term Bond
TCW Emerging Markets Income I TGEIX Emerging Markets Bond
TCW Emerging Markets Income N TGINX Emerging Markets Bond
TCW Total Return Bond I TGLMX Intermediate-Term Bond

I thought bonds would show up in this screen, but I frankly wasn't expecting that they'd be so dominant -- or that the type of bond fund would be so varied. Basically, bond investors around the world seem to have done better than domestic stock investors.

Once again, a lesson in the value of diversification. I am glad to say I'm smart enough to have had positions in at least one fund from each of these two lists. But I am sad to say that those funds did not represent a big overweight in any portfolio! Maybe this is a lesson in the importance of really committing to a good idea.

TMF's new fund only needs to make 2 or 3% to be like all the other funds in the world.

Actually, I think most stock funds this year, no matter where they are, will probably do a lot better than that -- if for no other reason than that they started at such a low point. And besides the mainstream indexes, we can see that it should be possible to make more than 2% or 3% if one looks in categories other than domestic stocks.

And now that I think about it, this is pertinent to that Motley Fool fund, because they say they'll go wherever they have to (around the world) to get the best stocks. There's no guarantee that they'll be smarter than other global fund managers, but the fact that they're free to invest outside the U.S. at least gives them some leeway.

Might be a good place for ROTH IRA money if you are in that bracket, but even a CD will get you 2-3% without the risk.

I haven't shopped around while writing this message, but standing at my local bank branch the other day I saw signs for CDs that topped out at around 1.7%. Note that the recent 10-year Treasury auction was below 3.5% and that their yield has slipped even more since then.

In short, I'm not certain that one can count on CDs to get even as much return as described above -- and one would have to hope that inflation stays flat. Avoiding risk is one thing, but 2-3% might not be enough to break even by 2011. We're in a new world...

Wrap-up: I started this as a new thread for a reason. We have no way of knowing how this Motley Fool fund would have done in comparison to any of the funds listed above, and for that reason it kinda doesn't even belong in the same discussion.

Mostly I wanted to see if were true that nobody made money in the last 4 years. No, it isn't. The "winners" listed above are fairly conventional funds that even somebody like me can locate and purchase, which means anybody here could do it.

Anyway, the fact that these funds made money means that investors do not have to resort to short-selling, Bear-market funds, or other tricks. Apparently it's just a matter of asset allocation and rotation.

Or timing, one might say... ;-)
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.