US investment funds have always been popular with investors from around the world. Let’s look at their financial performance in Jan-Feb 2012 to determine the winners and losers.
Which US funds showed the highest gains in early 2012?
Obviously, every single investor looks for profitable investment opportunities. Last year wasn’t a good one for investment funds. Some US investment funds reported major losses. The aggregate loss reached $123B. Paulson&Co lost $ 9.6B. This is the biggest fiasco since the collapse of Long Term Capital Management.
All investors are concerned about profitability. Most investors understand that the financial world has changed forever, with super incomes sinking into oblivion. Today’s most popular investments are standard and classic assets with the average ROI of 10-20%.
The biggest winners as of February 2012:
Let’s look at the following table representing the TOP 50 US investment funds as of February 2012, courtesy of :
February’s income. The most profitable investments were made by Allbanc Split Corp A, ACP Capital ORD, Speculators Portfolio, M&G Equity Investment Trust PLC, Raiffeisen-TopDividende-Aktien I VT, 3A Long Short Fund CHF A, Axion Opportunity Fund, LP, Loyola Capital Fund Ltd, Loyola Capital Partners LP, Trophy LV Fund EUR
Year-over-year income. Allbanc Split Corp A, Speculators Portfolio, M&G Equity Investment Trust PLC managed to earn their investors 539,67%, 177, 64% and 217,13% in 12 months.
The biggest losers were Guggenheim Solar, Market Vectors Solar Energy ETF, iPath DJ-UBS Coffee TR Sub-Idx ETN, PowerShares DB Crude Oil Dble Short ETN, iPath Pure Beta Coffee ETN, ProShares UltraShort DJ-UBS Crude Oil, Direxion Daily Retail Bear 3X Shares, Direxion Daily Gold Miners Bull 3X Shrs, ProShares Ultra VIX Short-Term Fut ETF, Direxion Daily Russia Bear 3X Shares.
According to Eugene Olkhovsky, ’s leading Canadian experts in financial markets, in order to understand whether an investment fund’s activities will be profitable, it is necessary to find out what assets the fund invests in. Today’s economic instability and market volatility makes numerous investors improve their financial competence.
Investment funds invest in stocks, commodities (including precious metals and oil), bonds, currencies, fixed property. Derivatives and currency forward contracts are used to increase the efficiency of portfolio management and currency hedging.
What investments were profitable in February?
The biggest income resulted from investing in the following assets:
Crude oil. Oil prices rallied considerably throughout the period mainly on the Middle East tensions. Another factor was the US GDP growth, which turned out to be much higher than expected.
Industrial metals. The demand for metals was high due to reassuring economic stats form the USA, positive sentiments and higher liquidity ensured by central banks.
Precious metals. The overall market situation (gold, silver, platinum, palladium) in February was unstable. Most markets were overheated. It became clear after the market reaction to Ben Bernanke’s statement on inflation.
Stocks: These days US companies offer lower dividends than their European counterparts. However, they seem to be ready for dividend hikes. For comparison sake, the 10-year US T-bond yield is 2% while the dividend yield of US pharmaceutical companies is 4-4,5%. Thus, US investment funds get much bigger income from investing in such dividend stocks than from investing in Treasuries, not to mention stock appreciation.
According to , US investment funds faced the following risks in February:
Excessively long-term strategies. An investment fund’s success depends on multiple factors including overall economic situation (both globally and locally), interest rates, inflation, market sentiment, lending costs etc. All of them can affect profitability.
Portfolio risks. When portfolio costs are changed (shifted), a fund’s net assets depreciate. A certain share of investing is done in foreign currencies. That is why major currency shifts may affect the net assets of the given investment fund.
Management skills. Obviously, portfolio managers should be competent and skilled enough to make money for investment funds.
Tax and regulatory risks. If an investment funds violates the US tax code, it may result in a loss of investment confidence (i.e. investor will no longer consider it as a reliable fund). The consequences are obvious.
What major problems did US investment funds have in Feb 2012?
According to , the most considerable problem was the unexpected collapse of gold prices from $1790/oz down to $1663/oz (-7,1 %).
According to the Department of Masterforex-V Trading System , some investment funds made a big mistake by not fixing profit during the forming of a shortened upswing (wave C: 1706.60-1792). The major reason for that was the fact that the price was getting close to the major level of resistance around 1795.30/1797.40.
Traders also missed the opportunity to close their trades around 1765.30/70, as it failed to turn into a solid level of support. Masterforex-V Trading System was giving distinct signals of a trend reversal (including a break below MF pivot 1767, which indicated a downtrend). Eventually, gold trades turned into major losers for investment funds.
How favorable is the current situation around the world in terms of investment opportunities?
International markets were dominated by positive tendencies in late February. Both European and US stocks rallied. The major reasons were the ECB’s 2nd round of Long Term Refinancing Operation (LTRO) and positive US economic stats.
The US and Europe are recovering as the ECB and the Fed Reserve continue their refinancing programs (LTRO and Operation Twist). However, this is not a long-term solution. Eventually, these steps will cause inflation growth. Zero interest rates keep leading to economic chaos. Financial companies are dismissing employees simply because lending costs do not correspond to the structure of their business. T-bond yields are deliberately lowered.
Another wave of purchases will be caused by economic improvements rather than further measures aimed at increasing the market liquidity. Leading indicators prove that. Belgium and Germany have already reached the bottom and are recovering while Spain and Italy will start recovering in Q2 2012.
Market Leader and would appreciate if you could participate in a survey. Please, visit the Academy’s forum for traders and investors and answer the following question:
Is it worth trusting your funds to investment funds?
