Insightful Investing

The continuing financial problems in Europe led to a flight to quality by many investors. This made US Government Bond Funds one of the only classes of investments to have positive returns in May. Wells Fargo Advantage Government Securities (STVSX) added 1.6% for the month, while Fidelity Intermediate Government Income (FSTGX) picked up 1.4%.

It is months like May that we included Long/Short Equities in our model portfolios. While most of these funds lost a percent or two this month, our leading fund, Hussman Strategic Growth (HSGFX), picked up 3.8%.

It is never fun to write these updates when the leading funds are those that lost less than the indexes, but we will give you the ‘relative’ highlights for our top no load mutual funds. A couple of our best performing mutual funds this month were two that were added to our portfolios with risk management in mind.  Wells Fargo Short Term High Yield (STHBX) only lost 1.0% while  Fidelity Real Estate Income (FRIFX) dropped just 1.2%.

OK, I guess I cannot put of writing about stock funds forever, so here goes. The leader of the pack was Forester Value (FVALX) which lost 3.3%, and Westcore Select (WTSLX) which fell 5.8% for the month.

Most ETFs did not fair much better. From an investing point of view, the best bets turned out to be the PowerShares DB US Dollar Index Bullish (UUP) which gained 5.7% and SPDR Gold Shares (GLD) which picked up 3.0% in May. The flight to quality helped the iShares Barclays 7-10 Year Treasury (IEF) finish as our Top Bond ETF with a gain of 2.9%,  while the iShares Barclays TIPS Bond (TIP) held its own by picking up 0.2%.

The iShares SP Small Cap 600 Growth (IJT) was the top domestic stock ETF with a loss of 5.9%. Not too far behind were SPDR SP Dividend (SDY) and iShares SP Mid Cap 400 Growth (IJK) which both lost 6.8%. Internationally, a couple of our Best ETFs were iShares China 25 Index (FXI) which lost only 3.6% and iShares Canada Index (EWC) which fell 7.3%.

Our Mutual Fund Portfolios, ETF Investment Portfolios, and Best Fidelity Funds have been updated through March 2010. The Mutual Funds in our Mutual Fund Portfolios are chosen from our 50 Best Mutual Funds. The ETF’s in our ETF Investment Portfolios are chosen from our List of 100 Best Exchange Traded Funds. The investment performance history of our mutual fund portfolios and ETF investment portfolios are tracked on our investment portfolio performance page.

The old adage ‘Sell in May and Go Away’ proved to be the right move this year as the SP 500 dropped 8% in May. Thanks once again to the financial crisis in Europe, International Stocks were hit with the double whammy of poor performance and a stronger dollar to end the month down 11%. The rapid rise in recent months finally caught up with Real Estate too, as those funds lost more than 5%.

The ‘flight to quality’ provided a real boost to US Government Bonds, with Intermediate Government Bonds up almost 2% and Long Term Bond funds jumping more than 6%. This did not help corporate bonds as investment grade debt did little more than break even, while High Yield paper lost almost 4%.