6/5/2013 10:15 PM ET|
5 safe places to park your money
If the market looks risky and you want to relax this summer, consider these funds that offer safety first but don't forsake investment gains.
Mutual fund investors looking for proven performance in a sluggish economic climate might want to give these five funds a look.
FPA New Income
The FPA New Income (FPNIX) fund has been conservatively managed by FPA Funds since July 1984. For those who aren’t familiar with FPA, it’s one of the most respected money management firms in the United States.
FPA’s philosophy, however, is to not lose money. For instance, consider the ugly four-month period from April 30, 2011, to Sept. 30. For those of you that don’t remember -- it wasn’t good. In those four months, the Vanguard 500 Index (VFINX) fund achieved a total return of -16.3%, including dividends. In comparison, the FPA New Income fund gained 0.88% in the period.
Approximately 86% of the fund's $5 billion in assets is invested in mortgage-related securities with credit quality ratings of "A" or better. The average life of its 399 holdings is 2.6 years, making it a reasonably short-term investment. And the fund's SEC yield of 2.6% during a recent 30-day period makes it a great place to park your money.
The fund's annualized total return since inception is 7.97% -- 26 basis points less than the Barclays US Aggregate Bond Index.
Metropolitan West High Yield Bond
Yield-chasing has been a vital investment theme amid this low-interest-rate environment. That's why the Metropolitan West High Yield Bond (MWHYX) fund has caught the attention of many income investors. It recently had an SEC 30-day yield of 5.95%; its 10-year annualized return is 9.5%.
This fund has done well over the long term. Morningstar gives it a five-star rating for its weighted average returns over the past three, five and 10 years.
In terms of risk, Metropolitan West High Yield Bond is about average for funds in its category, so it's better suited for investors with a least a little appetite for risk.
Berwyn Income (BERIX) is a balanced fund leaning toward income generation. With 30% of assets invested in common stocks and another 6% in preferred shares, this conservatively managed, 26-year-old fund has a well-deserved five-star rating from Morningstar.
Since inception, Berwyn Income has achieved an annualized total return of 9%. During the past 10 years, its return has matched that of the Standard & Poor's 500 Stock Index ($INX), with far less risk.
Most importantly, its annual expense ratio is 0.64%, considered low among its conservative-allocation peers.
Over the past decade, the Vice Fund (VICEX) has seen only one year of negative returns (2008) and has an 11.8% annualized total return during the period. So far in 2013, the fund is up 14.1%.
More impressive is that in the eight years of the past nine in which it has had gains, this fund has notched double-digit returns by investing in businesses that the fund's managers consider to be inoculated from recession.
ING Corporate Leaders Trust Series B
ING Corporate Leaders Trust Series B (LEXCX) is the ultimate blue-chip stock fund. It holds just 22 stocks, a number that will grow only when companies already in the fund spin off operations and the fund's managers decide they'd like a stake.
Money is more typically put to work when the fund managers amass sufficient cash to buy another 100 shares of a company they already own, such as Warren Buffett's investment vehicle Berkshire Hathaway (BRK.B). There’s no considering the price paid or other financial metrics that an active manager might consider.
Some might see its management expense ratio of 0.52% as a tad high for what’s essentially an automated fund. However, the fund's performance during its 78-year existence has been impressive.
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Telling us how to ride out the Summer of Recovery version 4.0?
Or is it 5.0?
The song remains the same.
Hilarious. All but one of the recommendations in the article is now down red at this moment while the $INX is up green.
Wrong----Wrong ------Wrong !!!!!!!!! Buy stocks like Union Pacific , Chevron , Bank of America,
Citigroup and 3M...................................$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
WRONG ! ! !
I have a much better place to keep the $8,570,000 I won in a Lottery. My name is Buford Pinkerton, an I live at 301 River Lane, in Lazy Lake Alabama. I dont like them Backs, so's i put all my cash in Garbage Bags an buried thems under the Rose Bushes in front-a my house. Nobody will every find them there.
Wow, people used ta laugh an call me stupid, but whos stupid now? I dont need no Bank place.
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