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5 Low Beta Mutual Funds to Brace the Record Market Dip
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For the week ended Mar 23, benchmarks registered their worst weekly performance since January 2016. Rising trade war fears between world’s two biggest economies, the U.S. and China, left an adverse impact on the markets. Major indexes continued to falter even in this week following recent tech slump and rising rate environment.
In this context, it is important to protect ones portfolio from such uncertainties and invest in low beta mutual funds.
Biggest Weekly Fall For Indexes in At Least 2 Years
For the week, the Dow, the S&P 500 and the Nasdaq declined 5.7%, 6% and 6.5%, respectively. All the three key U.S. indexes registered their largest weekly drop since January 2016.In the last five trading days (Feb 19-23), the Dow posted declines of 1,400 points. Both the S&P 500 and the Dow fell 4.8% and 3.2% for the year and finished in the red.
President Trump signed a bill on Mar 22, the purpose of which is to impose $60 billion in annual tariffs on China. Citing China’s ‘unfair’ trade practices as the primary reason behind such levies, Trump also stated that this would be the “first of many" such actions that he intends to take against China.
These so called ‘protectionist’ measures actually targets China for practices that Trump believes helped it to ‘steal American intellectual property.’ On Mar 23, the Commerce Ministry of China announced that around 128 different products imported from the United States are likely to be subject to the new set of tariffs. These tariffs will be imposed on around $3 billion of imports from the United States. On Mar 29, a spokesman from China’s commerce ministry said that import tariffs by the U.S. could result to open “Pandora's Box.”
Tech Slump, Rising Rate Hike Environment A Concern
Per Axios, President Trump is somehow “obsessed” with Amazon.com, Inc. (AMZN) as he is thinking of changing the tech giant’s tax treatment in order to protect the interests of mom-and-pop retailers and other key players. Reuters reported that Nvidia will suspend all its self-driving tests for the time being after a self-sufficient car killed a woman in Arizona.
Further, news came out that the U.S. National Transportation Safety Board will investigate a fatal crash involving one of Tesla’s vehicles in California. Additionally, Facebook, Inc (FB) stumbled following reports that analytics firm Cambridge Analytica easily collected personal information of more 50 million users without their consent. This raised privacy questions on the social networking giant’s data management and protection from unauthorized third party access.
In its two-day policy statement following the meeting ended March 21, the Fed increased the key U.S. interest rate by as much as 25 basis points. This increase in interest rates is the sixth such hike since December 2015. Additionally, the Fed sees three hikes in 2019 and two more the next, which would raise the interest rate to 3.4% by the end of 2020.
Buy These 5 Low Beta Mutual Funds
Amid such a high level of uncertainty, it will be prudent to pick safe mutual funds. Such funds are inherently less volatile than the markets they trade in. In this case, a low beta ranges from 0 to 1.
We have selected five low beta mutual funds that have given positive one-year annualized and year-to-date (YTD) returns, boast a Zacks Mutual Fund Rank #1 (Strong Buy), offer a minimum initial investment within $5,000 and carry a low expense ratio.
The question here is why should investors consider mutual funds? Reduced transaction costs and diversification of portfolios without several commission charges that are associated with stock purchases are the primary reasons why one should be parking their money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Oppenheimer International Small-Mid Company Y (OSMYX - Free Report) seeks long-term capital growth. The fund invests a bulk of its assets in equity securities of small and mid-cap companies. OSMYX invests in those companies whose market-cap is similar to those that are within the range of the MSCI All Country World (ACWI) ex-U.S. SMID Index.
OSMYX has an annual expense ratio of 1.16%, which is below the category average of 1.45%. The fund has one-year annualized and YTD returns of 33.5% and 2.7%, respectively. OSMYX carries a 3-year beta of 0.73.
Matthews Asia Growth Investor (MPACX - Free Report) seeks to achieve its investment objective by investing the majority of its assets in preferred and common stocks of companies located in Asia. It may also invest in convertible securities of Asian companies. MPACX seeks capital growth for the long run.
MPACX has an annual expense ratio of 1.14%, which is below the category average of 1.28%. The fund has one-year annualized and YTD returns of 35.5% and 2.2%, respectively. MPACX carries a 3-year beta of 0.89.
T. Rowe Price International Discovery (PRIDX - Free Report) seeks appreciation of capital for the long run. PRIDX invests heavily in those small- and mid-cap companies that are situated outside the United States. The fund invests its assets in companies that are based mainly in developed and emerging markets.
PRIDX has an annual expense ratio of 1.19%, which is below the category average of 1.45%. The fund has one-year annualized and YTD returns of 34.3% and 3%, respectively. PRIDX carries a 3-year beta of 0.80.
VALIC Company II International Opportunities invests a large chunk of its assets in equity and equity-related securities of foreign small- and mid-cap companies. The fund focuses on investing in those companies whose market cap is not more than $13 billion. VISEX seeks appreciation of capital for the long run.
VISEX has an annual expense ratio of 1.00%, which is below the category average of 1.45%. The fund has one-year annualized and YTD returns of 33.8% and 2.1%, respectively. VISEX carries a 3-year beta of 0.83.
Vanguard Growth and Income Fund Investor Shares (VQNPX - Free Report) invests in a diversified group of stocks chosen with the help of quantitative analysis. VQNPX seeks stocks that are believed to provide dividend income, have an impressive growth prospect and, as a group, are likely to provide higher returns than the Standard & Poor's 500 Index while having similar risk characteristics. The fund invests a minimum of 65% of its assets in companies included on the index.
VQNPX has an annual expense ratio of 0.34%, which is below the category average of 0.98%. The fund has one-year annualized and YTD returns of 16.7% and 1.7%, respectively. VQNPX carries a 3-year beta of 0.98.
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5 Low Beta Mutual Funds to Brace the Record Market Dip
For the week ended Mar 23, benchmarks registered their worst weekly performance since January 2016. Rising trade war fears between world’s two biggest economies, the U.S. and China, left an adverse impact on the markets. Major indexes continued to falter even in this week following recent tech slump and rising rate environment.
In this context, it is important to protect ones portfolio from such uncertainties and invest in low beta mutual funds.
Biggest Weekly Fall For Indexes in At Least 2 Years
For the week, the Dow, the S&P 500 and the Nasdaq declined 5.7%, 6% and 6.5%, respectively. All the three key U.S. indexes registered their largest weekly drop since January 2016.In the last five trading days (Feb 19-23), the Dow posted declines of 1,400 points. Both the S&P 500 and the Dow fell 4.8% and 3.2% for the year and finished in the red.
President Trump signed a bill on Mar 22, the purpose of which is to impose $60 billion in annual tariffs on China. Citing China’s ‘unfair’ trade practices as the primary reason behind such levies, Trump also stated that this would be the “first of many" such actions that he intends to take against China.
These so called ‘protectionist’ measures actually targets China for practices that Trump believes helped it to ‘steal American intellectual property.’ On Mar 23, the Commerce Ministry of China announced that around 128 different products imported from the United States are likely to be subject to the new set of tariffs. These tariffs will be imposed on around $3 billion of imports from the United States. On Mar 29, a spokesman from China’s commerce ministry said that import tariffs by the U.S. could result to open “Pandora's Box.”
Tech Slump, Rising Rate Hike Environment A Concern
Per Axios, President Trump is somehow “obsessed” with Amazon.com, Inc. (AMZN) as he is thinking of changing the tech giant’s tax treatment in order to protect the interests of mom-and-pop retailers and other key players. Reuters reported that Nvidia will suspend all its self-driving tests for the time being after a self-sufficient car killed a woman in Arizona.
Further, news came out that the U.S. National Transportation Safety Board will investigate a fatal crash involving one of Tesla’s vehicles in California. Additionally, Facebook, Inc (FB) stumbled following reports that analytics firm Cambridge Analytica easily collected personal information of more 50 million users without their consent. This raised privacy questions on the social networking giant’s data management and protection from unauthorized third party access.
In its two-day policy statement following the meeting ended March 21, the Fed increased the key U.S. interest rate by as much as 25 basis points. This increase in interest rates is the sixth such hike since December 2015. Additionally, the Fed sees three hikes in 2019 and two more the next, which would raise the interest rate to 3.4% by the end of 2020.
Buy These 5 Low Beta Mutual Funds
Amid such a high level of uncertainty, it will be prudent to pick safe mutual funds. Such funds are inherently less volatile than the markets they trade in. In this case, a low beta ranges from 0 to 1.
We have selected five low beta mutual funds that have given positive one-year annualized and year-to-date (YTD) returns, boast a Zacks Mutual Fund Rank #1 (Strong Buy), offer a minimum initial investment within $5,000 and carry a low expense ratio.
The question here is why should investors consider mutual funds? Reduced transaction costs and diversification of portfolios without several commission charges that are associated with stock purchases are the primary reasons why one should be parking their money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Oppenheimer International Small-Mid Company Y (OSMYX - Free Report) seeks long-term capital growth. The fund invests a bulk of its assets in equity securities of small and mid-cap companies. OSMYX invests in those companies whose market-cap is similar to those that are within the range of the MSCI All Country World (ACWI) ex-U.S. SMID Index.
OSMYX has an annual expense ratio of 1.16%, which is below the category average of 1.45%. The fund has one-year annualized and YTD returns of 33.5% and 2.7%, respectively. OSMYX carries a 3-year beta of 0.73.
Matthews Asia Growth Investor (MPACX - Free Report) seeks to achieve its investment objective by investing the majority of its assets in preferred and common stocks of companies located in Asia. It may also invest in convertible securities of Asian companies. MPACX seeks capital growth for the long run.
MPACX has an annual expense ratio of 1.14%, which is below the category average of 1.28%. The fund has one-year annualized and YTD returns of 35.5% and 2.2%, respectively. MPACX carries a 3-year beta of 0.89.
T. Rowe Price International Discovery (PRIDX - Free Report) seeks appreciation of capital for the long run. PRIDX invests heavily in those small- and mid-cap companies that are situated outside the United States. The fund invests its assets in companies that are based mainly in developed and emerging markets.
PRIDX has an annual expense ratio of 1.19%, which is below the category average of 1.45%. The fund has one-year annualized and YTD returns of 34.3% and 3%, respectively. PRIDX carries a 3-year beta of 0.80.
VALIC Company II International Opportunities invests a large chunk of its assets in equity and equity-related securities of foreign small- and mid-cap companies. The fund focuses on investing in those companies whose market cap is not more than $13 billion. VISEX seeks appreciation of capital for the long run.
VISEX has an annual expense ratio of 1.00%, which is below the category average of 1.45%. The fund has one-year annualized and YTD returns of 33.8% and 2.1%, respectively. VISEX carries a 3-year beta of 0.83.
Vanguard Growth and Income Fund Investor Shares (VQNPX - Free Report) invests in a diversified group of stocks chosen with the help of quantitative analysis. VQNPX seeks stocks that are believed to provide dividend income, have an impressive growth prospect and, as a group, are likely to provide higher returns than the Standard & Poor's 500 Index while having similar risk characteristics. The fund invests a minimum of 65% of its assets in companies included on the index.
VQNPX has an annual expense ratio of 0.34%, which is below the category average of 0.98%. The fund has one-year annualized and YTD returns of 16.7% and 1.7%, respectively. VQNPX carries a 3-year beta of 0.98.
Want key mutual fund info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>