Insightful Investing

Bond Funds benefited most from the FOMC actions to lower interest rates as Fidelity Inflation Protected Bond (FINPX) added 4.8% Fidelity Intermediate Government (FSTGX) gained 3.8% again this quarter, and PIMCO Low Duration (PLDDX) picked up 1.3% for the quarter. High Yield Bond funds had a rough quarter, not surprising given the turmoil surrounding the credit crunch.

Rising commodity prices certainly help the Rydex Managed Futures (RYMFX) lead the pack this quarter with a gain of 5.6%. From an investing point of view, the good news this quarter was the rebound of Real Estate Funds. Our two biggest losers for last quarter turned out to be our biggest winners this quarter. Fidelity Real Estate Investment (FRESX) added 4.8%, while Cohen and Steers Realty Shares (CSRSX) tacked on 2.7%. This was in contrast to those Real Estate Funds that had a large allocation to Internationals REITs, which managed to catch up, or would it be better to say catch down, with funds that held only US REITs. Now they all have lost close to -15% in the last year.

There were no winners in our group of stock funds this quarter, so we will have to see who lost the least. That honor went to Royce Premier (RYPRX) and Allianz NFJ Small Cap Value (PNVDX) which ONLY lost less than 3% and 4% respectively.

Our Mutual Fund Portfolios, ETF Investment Portfolios, and Best Fidelity Funds have been updated through December 2007. The investment performance history of our mutual fund portfolios and ETF investment portfolios are tracked on our investment portfolio performance page.

Asset Allocation for 2nd Quarter 2008

Since we recently added some bond funds to our portfolios we are moving 2% from our average allocation to cash to allocate to some of our Intermediate Bond Funds.

Asset Allocation April 2008

If you thought last quarter was bad, well the first quarter of 2008 was twice as bad as the 4th quarter of 2007. The turmoil in the financial markets caused by the continuing credit crisis, hit the stock market severely. Take your pick, any equity category out there lost about 10% of its value over the last three months, including the previously strong International Stocks. This quarter was a perfect example of how the financial markets have become increasingly global oriented. Just be thankful we were not checking the numbers in the middle of March. It looked a lot worse then.

The flight to quality, and another 2% cut in interest rates by the FED this quarter, helped Bonds be the only winning asset class this quarter with corporate bonds picking up 2% and longer term treasury bonds reaching gains of 5%. It is a good thing we encouraged you to increase your allocation to Bond Funds in the beginning of the year.

One good sign was that Real Estate finally stopped its slide. Depending on who you listened to, REITS at least broke even for the quarter. That certainly looks a lot better than a fall of nearly 20% in the last year.

The right place to be invested this quarter was commodities, an asset class that has traditionally been difficult for individual investors to get a piece of the action. There are a few funds out there that can give you exposure to commodities, but that is a category that is easier to invest in with ETFs than Mutual Funds.

Once again, the financial markets gave us an example of why it pays to have a well diversified portfolio.

Investment Returns March 2008