A review of the Top Five best performing securities by asset class contains no real surprises or change from the weeks before. The ranking uses the Sharpe ratio as the primary sort. Download the complete list at 2009-02-20 Top Five.
Summary: All asset classes are showing similar patterns of trending upward from the lows of 6 to 12 months. The annualized 4 week average return is -3.4%, 3 month is -0.4%, 6 month is -27.0%, 9 month is -30.9% with the 1 year is -22.8%. This ripple should roll through the periods so we should expect relatively better (i.e. less negative) returns in the outer periods. The 4 week decline may indicate a forthcoming further dip. Government bond funds currently provide the best risk adjusted investments, followed by Corporate Quality bonds, then Precious Metals and Municipal Bonds.
Asset Allocation - The Vanguard LifeStrategy (VASIX) is on top, but that's no real victory as this fund and the other four have all posted negative returns for the trailing 12 months.
Bear Market - These funds short the market and have been top performers since last spring. The iShares Short Treasury (SHV) is on top becasue of its low standard deviation compared to its mean. UltraShort Russell 1000 Value had the best Geometric Average at 46.%. The Short DOW 30 (DOG), UltraShort Financials (SKF) and UltriShort S&P 500 (SDS) follow.
Commodity - PowerShares DB Commodity Idx (DBC) is on top, but all five have negative 12 month trailing returns. Interesting, International Coal Corp. (ICO) which is a stock is second on the list. (Disclosure: I have a position in this stock.) All the commodity funds have standard deviations greater than 23.5.
Communications - Fidelity funds own this asset class. The top three, Select Wireless (FWRLX), Select Telecommunications (FSTCX) & Telecommunications (FTUAX), posted positive returns for the trailing 4 Week & 3 Month period.
Comsumer - Fidelity has four of the top five in this class but all have negative returns for the 12 month trailing periods. Fidelity Select Chemicals (FSCHX) is followed by Consumer Staples (FDAGX), Select Leasure (FDLSX), Vanguard Consumer Staples (VDC) and Fidelity Select Industrial Equip (FSCGX).
Corporate High-Yield Bond - Vanguard (VWEHX) is on top followed by Ishares (HYG), American Funds (AHITX), PowerShares (PHB) and USAA High Yield (USHYX). This class has positive returns for the 3 month trailing period but the 4 week perod returned to negative returns.
Corporate Bonds - This class is holding up well considering the credit issues. All five funds are showing positive trailing returns and the individual standard deviations are less than the individual means. On top is FPA New Income (FPNIX) followed by four of the Vanguard funds. The Short-Term ETF (BSV), Short-Term Index (VBISX), Total Bond Market (VBMFX) and the Total Bond ETF equivalent (BND).
Diversified Emerging Market - This class has positive returns for the 3 month trailing which is in sharp contrast to the -40.0% to -50.0% trailing 6 month period. The 4 week period is averaging about 0% returns. This may be a class worth watching. On top is iShares Chile (ECH), followed by iShares Brazil (EWZ), Fidelity Latin America (FLTAX), BLDRS Emerging Markets (ADRE) and American New World (NEWFX).
Financials - Negative for the 12 month trailing periods. Standard deviations are less than the negative means which means no anticpated positive returns anytime soon. Fidelity Select Brokeage (FSLBX) tops the list.
Foreign Corporate Bonds - Has positive 3 month trailing returns and standard deviations exceed the means. PowerShares Emerging Mkts (PCY) is on top floowed by Templeton Global Bond (TPINX).
Foreign Large Cap -No life here. All negative for trailing 12 month periods.
Foreign Mid Cap - Three of the five funds have life spans of less than 12 months. Third Avenue Intl (TAVIX) is on top followed by Vanguard Intl Explorer (VINEX).
Foreign Small Cap - Only three funds in this class and all three are negative for the trailing 12 months.
Global Real Estate - Negative 12 month trailing returns across the board, high negative means and Sharpe ratio ranging from -2.6 to -3.1.
Government Bonds - Positive 12 month trailing but clearing trending downward. This class may go 4 week negative following 3 of the 5 funds which already have. On top is SPDR Interm term (ITE) and it has a -1.0% 4 week return. Vanguard GNMA (VFIIX) has a 0% 4 week return which contrasts with the 3.0% 3 month, 5.0% 6 month, 5.0% 9 month and 14.0 % 1 year return.
Healthcare - The Biotech ETF (BBH) is on top and the only one of group with a positive geometric average. Fidelity Biotech (FBTAX) is distant second.
Inflation Protected Bonds - All five are showing positive 4 week and 3 month returns although the 4 week is less than the 3 month. Across the board relatively stable with group standard deviations around 5.0. On top is Blackrock IP (BPLBX) then SPDR TIPS (IPE), Vanguard IP (VIPSX), iShares TIPS (TIP) and Fidelity IP (FIPAX).
Large Cap Equity - All dead with the CGM Mutual (LOMMX) being less dead than the others. The CGM Focus (CGMFX) (Disclosure: I have a position in this fund) and Rydex S&P Equal (RYE) have -7.0% means with standard deviations of around 21.8%. The fourth entry is the John Deere stock (DE) is has been really beaten up followed by Van Kampen Growth (ACPAX).
Mid Cap Equity - As a whole worst than the large cap class. On top is Fidelity Select IT (FBSOX).
Municipal Bonds - All positive returns for 12 month trailing. Low standard deviations, means between -0.8 to 1.9 and Sharpe above 0.0. Leading is Fidelity Advisor Sh Int Muni (FASHX) then Vanguard Int Term (VWITX) and iShares Muni Bond (MUB).
Natural Resources - Potash Corp (POT) well ahead of the other four. However, this stock is a wild bet with an annual standard deviation of 55.2%. It has a 1 year return of 51% with a 9 month return of -57%, a 6 month returns of -52% then 3 month of 20% and a 4 week return of 21%. A wild ride.
Pacific/Asia - All five showing life in the 3 month period but back to around 0% for the 4 week period. Better considering the 6 monh to 1 year where -27% to - 47% is the norm. Overall class average is less than the Diversified Emerging Market class. The China funds own four of the five slots. On top is iShares China (FXI) then Templeton China (TCWAX), SPDR China (GXC), Matthews Asia Pacific (MAPIX) and iShares Hong Kong (EWH).
Precious Metals - Gold has pushed these funds skyward with double digits for the top three entries. Leading is SPDR Gold (GLD) with annuallized Geometric Avg of 16%. Then PowerShares Gold (DGL) at 14%, ProwerShares Prec Metals (DBP) with 13%. iShares Silver (SLV) and Market Vectors Gold (GDX) both had single digit returns at 6% and 5% respectively.
Real Estate - Vanguard REIT (VGSIX) is on top but this is no great achievement. As a group Real Estate ranks with the Financials in value. Real Estate posted trailing returns in the range of -11% to -69%.
Small Cap Equity - 4 week and 3 mon ranging from 2% to -7% is better than 6 months to 1 year which varied between -16% to -47%. Four week is down from 3 month.
Technology - Slightly better than Small Caps. iShares Biotech (IBB) had a 5% 3 month followed by a -1% 4 week return.
Utilities - Worst than Technology and on par with Financials and Real Estate.
World Stock - Lowest of the 29 asset classes.
Analysis by USA-Living Financial Group. Past performance is NOT an indicator of future performance.
