The Nvest Market Blog, our current thoughts on the Street

Princeton Futures Strategy Fund - PFFAX

posted 07.27.2010 at 09:36 a.m. by steve

Recently, Nvest Wealth Strategies has been researching and performing due diligence on fund strategies that can further help reduce portfolio volatility. Historically managed futures provide an uncorrelated investment solution to the traditional asset classes of equity and fixed income. This low correlation serves as an excellent diversifier during periods of market volatility. When used in conjunction with a portfolio of traditional asset classes, the fund has the potential to reduce risk and enhance return. Additionally, unlike other alternative investments (such as hedge funds, real estate, private equity, etc.), managed futures as an asset class has maintained low correlation with other asset classes even during times of market stress in which asset correlations tend to rise (assets behave increasingly like one another).

Princeton Futures Strategy Fund (ticker: PFFAX / PFFNX) seeks to provide diversified exposure to the commodities, financial and foreign exchange markets while attempting to generate attractive, risk-adjusted returns through a fund-of-funds architecture with the daily liquidity and fee structure of a mutual fund. While the Princeton Managed Futures Strategy Fund is newly available in a mutual fund format under the Investment Company Act of 1940, the sub-advisor 6800 Capital, LLC has been running this hedge fund strategy as a limited partnership (LP) for the last 14 years with very attractive performance. Read more about Princeton Futures Strategy Fund.

permalink | posted in: Mutual Funds

Oppenheimer Developing Markets Fund - ODMAX

posted 10.09.2009 at 1:15 p.m. by steve

Late this spring, we began discussing with clients the concept of a New Normal. Our newsletters, commentary and recent meetings have attempted to articulate that vision. As a refresher, economic growth in the US is not likely to occur at the pace that it has in past recoveries under the New Normal. We strongly believe that life has been changed, perhaps semi-permanently as credit will be more rationed for years to come. Consumers have begun to save more and reduce debt; they are likely in the early innings of their de-leveraging process. That behavioral change, combined with higher anticipated taxes to pay for large government deficits and increasing regulatory oversight will set a slower speed limit for growth in the United States and other developed economies. We believe that developing country economies, also known as emerging markets, will grow at a more swift pace. Countries like Brazil, India, China and the like will continue to experience fast economic gains, especially as compared to their developed country counterparts. The most notable difference between countries like the US and emerging economies is the consumer. While the US consumer is de-leveraging, consumers in other parts of the world are actually increasing their level of spending as they marginally increase their standard of living.

We are currently increasing client exposure to foreign equities beyond what we have ever before. We are targeting foreign equity exposure to represent roughly one-third of total client equity exposure. For example, if a client investment objective was 90% stock and 10% bonds, that client portfolio would target 30% foreign equity exposure. In addition, we feel that emerging markets in particular will be an area of especially strong opportunity for investors. With that in mind, we sought to identify an emerging/developing markets mutual fund with a well-defined process, articulated buy and sell discipline and strong track record to best capture this opportunity. The result of our process yielded the Oppenheimer Developing Markets fund (ODMAX).

In recent months you have likely noticed it being bought in your investment portfolios that we manage. It has performed well, and we anticipate that it will significantly outperform domestic-oriented funds going forward in this New Normal. For more information and in-depth analysis on the fund, click the link (ODMAX). Please contact us if you would like to receive additional information on this fund, and our current investment thesis.

permalink | posted in: Mutual Funds

Columbia Technology

posted 10.15.2007 at 1:34 p.m. by steve

As we’re certain you are aware, much prudence, thought and analysis goes into each investment decision we make on your behalf. We continuously track client portfolios and the performance of each investment in them. Along with performance tracking, we closely monitor each fund’s allocation to the various business sectors (financials, industrials, technology, healthcare, services, etc…) to ensure that our funds are not collectively overexposing your portfolio to any one sector.

Recently, we have been paying close attention to research and models that suggest Technology stocks, largely out of favor since 1999, may be in good position to outperform the broad market under the current macro-economic landscape. As such, we have done much analysis in recent months to identify a tech-specific fund for use in our more aggressive client portfolios, believing that a slight increase in technology expposure may provide a nice boost to client portfolios.

Through the process and screening of hundreds of funds, we selected the Columbia Technology Fund (CMTFX) for several reasons including its strong long-term track record and disciplined but opportunistic investment approach. Within recent weeks, you may have noted the addition of Columbia Technology to your portfolio. CMTFX looks for companies that are most likely to benefit from a technological trend, and then identifies those that have the ability to grow revenue and earnings; have a strong balance sheet and trends in accruals; sustainable valuations; and have the possibility for a 20% positive upside to their price target over 12 months. The fund has consistently ranked among the top in its peer group.

For additional information on this fund or to gain further insight about its addition as it relates to your portfolio, please give us a call.

permalink | posted in: Mutual Funds