Posts Tagged ‘Diversified’

Q&A: A diversified portfolio of index funds or target date funds?

Question by investoman: A diversified portfolio of index funds or target date funds?
Low cost index mutual funds seem to be the favorite among all money experts when it comes to creating a retirement portfolio. However, with the advent of no-load, low-cost target date funds and which provide automatic age based balancing and asset allocation, I’m torn between the two and need some advice on which one is the best option to go.

Best answer:

Answer by jlf
You get the same thing either way. With a target fund, the asset allocation adjusts automatically based on the target date. If you use “fixed” index funds, you have to do the rebalancing.

Know better? Leave your own answer in the comments!

On Diversified Investment Dynamics ? Mutual Funds, Stocks, Commodities

India is a diverse country and this diversity is witnessed in the Indian market too. You have a plethora of options for investment starting from stocks to mutual funds, commodities, and more. Diversifying the investments in all available segments is the buzz phrase at present. You will hardly come across investors who have put in money on only stocks in India. When investment opportunities are myriad and when these are available to your advantage why not grab them!

When we speak of mutual funds in India, there are various terminologies, information, and news associated that the fund investor should know. Right from related information, fund profile, scheme profile, daily NAV, historical NAV, category returns, dividend details to fund ranking, MF activities, all holdings, what’s in and what’s out, all facts do carry importance. One reason that mutual funds in India are one of the most preferred investment options is the tax benefits associated.

Staying updated with fund performance matters. You will come across top performance and bottom performance schemes with the return percentage displayed in many a financial and brokerage portal. If JM Core 11(G) underperforming at -16.59% returns, you will find SBI Magnum FMCG outperforming at 32.22%. If you opt for the underperforming scheme, loss is certain. The return percentage may change the very next day favoring the loser. Before you invest in mutual funds of India, do stay updated with the latest news and statistics.

The market of share in India has been exhibiting volatility for quite some time. It is no wonder affected by the commodity market as well. And funds are affected by the performance of stocks in India. With the sensex and nifty below the 19000 and 6000 marks respectively, most investors, especially novice investors, are confused about how to proceed. Experts never panic as they know how to swim against the tide. It is the beginners who are maximum losers. But there are few informed beginners who do gain big in the market of share in India.  

Stocks in India are either listed in the NSE or the BSE; there are other stock exchanges at the state levels too where stocks are traded. No share in India will yield you returns unless you conduct all necessary research to find out its potentiality. A registration at a reliable and reputed brokerage portal will well serve your purpose of seeking the right guidance. At this platform, you can not only seek guidance on stocks in India but also mutual funds and the commodity market.

It is all about trading in products like gold, silver, copper, potato, etc. that constitute the commodity market. In a week’s time, the price of silver has come down immensely with little price reduction witnessed in gold. As per latest commodity market news, silver is in the ‘gainers’ category and potato and mentha in the ‘losers’ category. The results may change the very next day. Your wise trading decisions in commodities can happen if you are well-informed and updated with the latest news.

Related Mutual Fund News Articles

Incoming search terms for the article:

• comment investment on shares india
• Sensex Nifty wordpress comments top sites

Why Mutual Funds Aren’t Diversified

www.unlimitedinvesting.com The stock market has crashed, and this video uncovers the most important lesson of 2008 the shortcomings of pretend diversification. Many people are trying to figure out what to do about their IRA or 401(k) portfolio. When will the stock market recover? What is the average return of the stock market now? How can I invest in alternative assets. Self-Directed IRA and Solo 401(k) expert Jeff Nabers speaks about what diversification is, whether it really works, and how to make it work. Also, visit: www.unlimitedinvesting.com
Video Rating: 0 / 5

Diversified Mutual Funds

Mutual funds diversification refers to the act of investing in many different securities at the same time. The reason for this is normally to spread risk and to increase the returns that one is entitled to. By spreading risk we mean that, when one of the securities is adversely affected by the market conditions or by other factors, the other securities will cover up for the loss. This is a real example of not putting all your eggs in one basket.

Mutual funds ere characterized by many securities falling under different categories. For example, there are sector funds, energy funds, biotechnology funds, financial funds and IT funds. Diversification comes in when you invest in a number of securities from each or a number of the categories. If for example you buy 100 stocks of the financial fund, you may think that your stocks are well diversified, but the truth of the matter is, if market conditions affect the financial funds and not the energy funds, all your 1000 stocks will be affected.

Diversification become enjoyable and offers guarantee when you buy securities in many different categories. Diversification in mutual funds can be created in one of two ways; you can either buy securities in many different categories, or you can simply buy a portfolio of mutual funds that is representative of the various sectors. To do so, there are some steps that you can apply to create the diversification. To begin with, identify the objectives of the portfolio.

Look at the amount that can be invested in the portfolio, the return objectives, the risks and the amount of time needed for the portfolio to be created. Once you have the facts on the table, come up with an investment strategy that will be based on these factors. You have to look at the risk tolerance and high returns as well. To balance the portfolio, include low-risk funds as well.

Why Traditional Diversification is not Diversified

Diversification has taken on many meanings within the past few decades depending on who you talk to, and in my opinion, I think on the way we lost its true meaning. I believe the reason for losing the real meaning of the word is due to the financial services industry bending and flexing it to their benefit. Putting the question of diversification to someone within the traditional financial services sector, is like asking someone in the oil business what is the best source of energy? It would be a safe bet that both answers would be skewed in favor of what they could sell you. So, what really is diversification? The definition, according to Webster’s dictionary is, “To make diverse: give variety to.”

So, to translate Webster’s definition to real world purposes, let’s explore some opinions on what supposedly qualifies as diversification? The large brokerage houses like Fidelity, Schwab, J.P. Morgan, and most others all pretty much say the same thing, “A basket of stocks that cover many sectors in a weighted fashion.” Well, I think we have all heard that before and it sounds like good advice if stocks were the only thing we were able to invest in. Fidelity outlines this approach on their website by stating one of the simplest, most common philosophies used in the traditional investment world when speaking about diversification, “By spreading your money out over different kinds of investments – stocks, bonds, mutual funds, and cash – you generally reduce risk without sacrificing potential returns.” Though I think we can all agree that the aforementioned is true, I think we can also agree that the stock market and bond market tend to counter move each other thus affecting each other. Also, consider that Fidelity only talks about what they can sell you, i.e. stocks, bonds, mutual funds, and money market cash accounts(what I like to call “The Traditional Four”). Merrill Lynch’s website states a similar philosophy and their version of diversification is either small cap or large cap, value or growth, and domestic or international. That still refers to publically traded financial markets, and again only offers products that they can sell you.

Most of the people reading this know that the stock market or the financial markets as a whole are basically a place where companies in the world can present and solicit themselves publicly. But one must consider that, due to globalization and advanced communication, all the exchanges in the world seem to operate as a single market place that have access to the same media and have the ability to influence each other. If you had a basket of stocks that you thought was diversified because it was covering many industries, and because it traded on one or more of these global stock markets operating as part of the larger single market, isn’t there a fundamental diversification problem with this? What I see is only one marketplace; hence, it is not diversified and a glaring example of this is the current credit and subprime crisis. Ask yourself if you would invest all of your money in say, only the NASDAQ? If you answered no, then your common sense is telling you that a single market is not diversified enough, and not safe enough. Through reaction and counter reaction, all of these global markets are moving and functioning like a single global market and your own common sense will tell you whether or not it is safe enough for all your investment dollars.
 
At this point I have every broker, advisor, and trader up in arms and ready to call in the firing squad, but before we do that, let’s dig a little deeper. Ask yourself how many times the “basket of stocks” made it through a correction untouched? Ask yourself how your portfolio fared during the dot.com bust in the early part of this century? Ask yourself how it performed during the little correction back in July of 2007 or the first few months of 2008?
 
Now that I have used up all my shock value, let’s get practical. Stocks, bonds, and mutual funds are all very important investment vehicles, but they are only three that are represented by the “single market.” Now here is something that most financial advisors probably won’t ever talk to you about. THERE ARE OTHER WAYS TO INVEST YOUR MONEY. There are people out there that are making great returns in ways that are not directly related to the single “financial” market. So let’s take a look at a few alternative investments that are not represented by the “single market” by using some examples below:

Raw Land – Medium Return-High Risk-Not Passive

Income Property -Medium Return-Medium Risk-Not Passive

Lending-Medium Return-Medium Risk-Not Passive

Rare Coins-Low Return-Low Risk-Not Passive

Antiques-Low Return-Low Risk-Somewhat Passive

Car Washes-Medium Return-Medium Risk-Not Passive

Coin Laundry-Medium Return-Medium Risk-Not Passive

Art – High Risk-High Return-Somewhat Passive

 
As we can see, there are definitely some alternative investments available that are not offered by your typical financial advisor, but there is a reason most people would not invest in these alternative investments; they are not for the inexperienced nor are they passive investments like stocks, bonds, or mutual funds. I am not using the IRS definition of passive, because in their eyes passive means you buy a rental property and you get to go to the bank and cash checks every month without any work, though this is rarely the reality. I am however using passive in the sense that after an individual purchases the investment, there isn’t additional work or time that goes into it except for collecting a return. This is sometimes called an “armchair investment.” With this in mind, all of the above investments really don’t qualify. Let’s face facts, it would be great to diversify into these alternative investments, but who has time to do the years of research it takes to be a numismatics expert and successfully trade rare coins at a profit, or manage and staff a car wash every day. One could argue that if you hired a property manger for your rental property, it would make it passive; however I can tell you from my own experience that you still have to manage your manager.

So, what if the aforementioned alternative investments were offered as a private fund with the expertise needed to return double digit returns while the investor did nothing but collect a check every quarter? Would that be a diversification from stocks, bonds and mutual funds? My unsolicited answer to that is yes, and in the effort to offer up an alternative, it is what helped give birth to hedge funds and private equity funds with the former’s strategy mostly using the financial markets and the latter offering more private alternative investments.

Most of us know about REIT’s that allow us to have the benefit of property ownership without being involved in the management aspect. However, I can almost guarantee that 95% of the investors out there didn’t know that there are managed funds for alternatives like rare coins, art, lending, medical technology, etc that was packaged into an armchair investment. The best part is that these private funds can often be a true diversification for an investor’s portfolio and also be an armchair investment. Remember, investing in a private alternative investment not only gives diversification from traditional investment vehicles but it also gives another important diversification factor; many of these funds are not traded on a public exchange.

This is crucial as it helps shelter the investment from the day to day fluctuations of the financial markets. Another important characteristic found in many of these investments is that they are backed by real tangible assets. This goes back to an age old argument of what the real value of paper is in comparison to something tangible like real property. There may also be internal diversification within many of these alternative investment funds, which adds another possible layer of security (As a managing partner of Regent Global Funds, we have always believed that diversification within the fund itself to be paramount to our strategy). All together, this gives the investor diversification from traditional investments, traditional markets, and from the investments themselves in the portfolio. They are basically structured as a private mutual fund based on an alternative investment strategy.

The next time you hear someone advising or talking about diversification, ask them, ” What is your definition of diversification?” If they hit you with the “Traditional Four”, make sure you tell them about the single market. You may find yourself on a soap box lecturing to traditional people about alternative ideas.

Find out: How to structure a diversified portfolio?

In an exclusive interview with CNBC-TV18, investors call up to ask Ashish Kehair, ICICI Securities, about his top mutual funds for systematic investment plan (SIP).^M ^M

Incoming search terms for the article:

• ashish kehair icici interview

These Is What A Diversified Mutual Fund Investment Entails

An investor opts for a mutual fund investment for the sole purpose of pooling resources with the ultimate aim of making profits from it. However, a wise investor should be informed that, every investment carries its own risk which would need to be reduced at all costs. To reduce this risk, one could opt for diversification, in order to minimize the risk to a portfolio.

You will need to invest in instruments that are affected by different market conditions, i.e. the stocks, options and bonds that are not related to each other. You should also invest in both sector and industrial options in order to balance your investment. A wise investor would also want to consider investing in real estate as well as entering into business partnerships with other investors.

A mutual fund investment is built based on the diversification principle, However, the investment will allow you to diversify within a certain sector, either the retail sector or the industrial sector. Check with the portfolio managers to see whether your investment would be specific to a certain sector or not. If it is not, plan to increase your investment over more industries and sectors.

Many investors make the mistake of only investing in the companies that they think are making profits, or which have strong financial base, only to wake up one morning to find them down. Worldcom and Enron best illustrate my point here. It is important that a portfolio manager splits the invested dollars into the different options, bonds and securities, which would provide them with a balance of the risk involved.

There are various business models for managing a diversified investment portfolio that are available market today. These models are dependent on the sector the investment is based, the risk that is associated to that sector, the size of the company involved and its financial base, among other factors.

Nuveen Investments Offers New Diversified Debt Instrument Mutual Fund

Nuveen Investments Offers New Diversified Debt Instrument Mutual Fund
CHICAGO—-Nuveen Investments, a leading provider of diversified investment services, today announced the availability of the Nuveen Symphony Credit Opportunities Fund . The new fund is the first mutual fund to leverage Symphony Asset Management’s bottom-up credit analysis as it looks across the capital structure of leveraged companies in its efforts to capture risk-adjusted returns in both …

Read more on Business Wire via Yahoo! Finance

Top Diversified Bond Funds

Featuring top performing “Diversified Bond” fixed-income mutual funds, because they protect investors by diversifying across sectors. This approach ensures that any negative fluctuation in a sector only has a slight overall effect on the fund – and its investors, since various sectors of the bond market react differently to changes in the economy and interest rates.These funds thus pursue total return as well as income by investing in a variety of bonds, including corporate, U.S. government, government agency and mortgage-backed bonds.

Investors can find such diversified bond funds by viewing the entire list of the Zacks #1 Rank Diversified Bond Fixed-Income Funds.

5 Great Examples of Diversified Bond Funds

Delaware Diversified Income A (DPDFX) seeks maximum long-term total return. It was incepted in December 1997.

This diversified bond fund mainly invests in three sectors of the fixed-income securities markets, the U.S. Investment Grade Sector, the U.S. High-Yield Sector, and the International Sector. This diversified bond fund invests a majority of its assets, at least 80%, of its net assets in fixed income securities.

The diversified bond fund has an expense ratio of 0.99% against a category average of 0.96%. As of July 2009, it has a portfolio turnover of 422% against a category average of 226%.

Paul Grillo has been lead manager of the fund since February 2001. Grillo joined Delaware in 1992 and is a member of the firm’s taxable fixed income portfolio management team and asset allocation committee.

MainStay Diversified Income A (MASAX) seeks total return and current income by investing both in domestic and foreign debt securities. It was incepted in February 1997.

This diversified bond concentrates on U.S. government and domestic investment grade securities, high-yield corporate bonds and international debt securities and wishes to combine high quality, higher return potential and broad diversification by country, currency, industry and type of security. The diversified bond undertakes economic and market monitoring, fundamental research and relative-value analysis in order to identify promising countries, bond market sectors and securities.

Shareholders have to make a minimum initial investment of $25,000 to enter this Zacks #1 Rank (“Strong Buy”) fund. This precious metals fund has an expense ratio of 1.30% against a category average of 1.15%.

Dan Roberts has been lead manager of this diversified bond fund since October 2009. Before joining his current assignment in 2004, Roberts was the chief investment officer at Pareto Partners.

Pioneer Strategic Income A (PSRAX) seeks a high level of current income It was incepted in April 1999.

The diversified bond fund invests at least 80% of its assets in a broad range of both issuers and segments of the debt securities markets. The diversified bond fund invests in three segments of the debt markets – below investment grade (high yield) securities of U.S. and non-U.S. issuers, investment grade securities of U.S. issuers and investment grade securities of non-U.S. issuers. The proportion of assets allocated among these segments depends upon the fund advisor’s outlook for economic, interest rate and political trends.

The diversified bond fund offers dividends on the last business day of each month. Capital gains are distributed in November. As of September 2009, it has a portfolio turnover of 32% against a category average of 104%.

Kenneth J. Taubes has been lead manager of the fund since April 1999. Taubes has been an investment professional since 1982 and joined Pioneer as a senior vice president in 1998.

Nuveen Multi-Strategy Income A (NCBAX) seeks the highest possible level of current interest income which is exempt from federal income tax and California state individual income tax. It was incepted in April 2006.

This diversified bond fund invests in investment grade, long-term municipal securities. It may invest up to 35% of assets in debt of non-U.S. bond issuers. It may also invest up to 20% of net assets in high yield debt securities and up to 10% in foreign entities that are located in emerging markets.

Shareholders have to make a minimum initial investment of $3,000 to enter this Zacks #1 Rank (“Strong Buy”) fund. It has an expense ratio of 0.75 % against a category average of 0.96%.

Andrew John Stenwall has been lead manager of this diversified bond fund since December 2004. Since 2008, Stenwall is an employee of both Rittenhouse and Nuveen Asset Management and specializes in global fixed-income and currency markets.

Virtus Multi-Sector Fixed Income A (NAMFX) was incepted in December 1989. The diversified bond fund aims at maximizing current income while preserving capital.

This diversified bond fund invests in all sectors of the bond market, concentrating on undervalued sectors and securing gains from overvalued sectors. At least 80% of the funds assets are invested in fixed income securities issued or guaranteed by the U.S. Government or its agencies, in debt securities issued by foreign issuers and in junk bonds.

Shareholders have to make a minimum initial investment of $500 to enter this Zacks #1 Rank (“Strong Buy”) fund. As of July 2009, it has a portfolio turnover of 91% against a category average of 104%.

David L. Albrycht has been lead manager of the fund since March 1994. Albrycht is a Chartered Financial Analyst and is a senior managing director with Phoenix Investment Counsel.

Discover Many More Funds

Learn more about the new Zacks Mutual Fund Rank and discover some of the best market-beating mutual funds by browsing our mutual funds section. This part of Zacks.com offers a variety of tools, including mutual fund research, a new mutual fund screener, helpful answers to frequently asked questions and quick access to prospectuses and other information.

By applying the Zacks Rank to mutual funds, investors can stumble on funds that not only outpaced the market in the past but are also expected to outperform going forward.

Incoming search terms for the article:

• best bond mutal fund in india
• bond diversification sector
• uti mutual bond fund rate of return
• zacks top bond funds