Insightful Investing

Of the funds on our recommended list at the beginning of the year, Cohen & Steers Realty Shares (CSRSX) and Royce Value Plus (RYVPX) returned over 15% in the first quarter. While all of our Real Estate funds gained at least 13% for the quarter, Kinetics Paradigm (WWNPX) almost went from worst to first by also returning more than the number that not so unlucky number, almost twice the gain of the average Mid Cap fund. That just shows you that one bad quarter is no reason to drop a fund from your portfolio. On the other hand, two bad quarters knocked several funds from our list.

Julius Baer International Equity (BJBIX) led our strong performing International funds, bringing home just shy of the magic number for this quarter, 13%. Harris Insight Equity (HIEQX) was our best performing Large Cap fund, returning a more than respectable 7.5%.

A positive return was hard to achieve for most bond funds this quarter, except for those with a considerable allocation to High Yield bonds. That being said, it should not surprise you that Fidelity Capital & Income (FAGIX) and Westcore Flexible Income (WTLTX) both earned more than 3% for the quarter to lead the fixed income categories.

Our Mutual Fund Portfolios and Best Fidelity Funds have been updated through December 2005. The investment performance history of our mutual fund portfolios are tracked on our investment portfolio performance page.

Asset Allocation for 2nd Quarter 2006

There were no changes to the bond funds in our portfolios except that Scudder High Income Plus changed its name DWS High Income Plus Inv (MGHVX) just to make sure you know that Deutche Bank has taken over the fund.

We were disappointed that Fidelity Contrafund (FCNTX) closed its doors to new investors, so if you did not miss the boat and already own that fund, consider adding to it.

The only deletion this quarter is RS Value (RSVAX) which has not kept up with our other Mid Cap choices.

We made a couple of additions this quarter by adding the Wells Fargo Advantage Discoverer (STDIX) fund in the Mid Cap Growth category and Small Cap Core fund ABN AMRO/TAMRO Small Cap (ATASX).

There are no changes to our asset allocations for the 2nd Quarter of 2006.

Asset Allocation April 2006

The stock market started 2006 strong, as Small Cap stocks lead the charge with a 14% return in the first quarter. Real Estate topped that by bringing home a 15% gain for the quarter. So much for the much anticipated demise of those two asset classes. While Large Cap stocks finished in the money for the quarter, a 4.2% return was well behind the leaders. A falling dollar continued to help international stocks bring home over 9% for American investors.

Value stocks continue to outperform growth stocks, another trend that the media has been calling for an end to for quite sometime. While we expect that to happen eventually, we will not be making any changes until we there is a confirmation that the trend has reversed course.

Bonds continue to struggle, but in spite of the continued tightening of interest rates by the Fed they really did not react very much, falling less than 1% for the quarter. High Yield bonds on the other hand continue to hold up well, averaging a gain of just over 2.5% for the quarter.

Investment Returns March 2006