Category Archive 'Mutual funds'

Keepin’ it real: real estate funds again, this time international

Mutual funds

This week’s Barrons has an article about investing in global real estate () in which five mutual funds were suggested:

Kensington International Real Estate
Alpine International Real Estate
Cohen & Steers International Realty A
ING Global Real Estate A
Northern Global Real Estate Index

I’ve been interested in learning more about real estate funds and REITs ever since I made my some months ago and then after receiving advice from readers and realizing I was buying something I really didn’t understand. One reader more knowledgable than I recommended looking internationally instead.

The funny thing is that of the 5 mutual funds listed in the article, only three are really available to me as an individual investor. KIRAX is open to institutional investors only (and its sister funds KIRBX and KIRCX are available for redemptions only), as is IGLAX, and none of our 401(k) plans list these as an option. NGREX carries a transaction fee at Schwab. It’s also worth noting that many of these carry up to a 4.5-5.75% front load fee depending on your broker.

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Watch out when using compounded average returns

Mutual funds, Personal finance

Toward the end of December, I received some questions from readers asking about how to calculate average returns on investment portfolios using Excel. In previous posts on this site, you can read about using , Excel’s , and simple averages, but they all come with one big warning, which is that your previous average performance may not necessarily be a good way to set your expectations about your future performance.

In other words, let’s say that you did your calculations of your return over some number of years and found out that you averaged a 5% annual return. That doesn’t necessarily mean that you should expect a 5% return next year. I thought it might be worth delving a little further into the potential pitfalls of using averages.

Let’s say we have three hypothetical portfolios and data on their performances over a 10-year period. Suppose that in each one, we started off with $100 to invest and ended after 10 years with $110.

Using to calculate their returns, we find that all three portfolios averaged 0.958% over the 10 years. Paltry performance, but hey, this is for illustration purposes only!

Even though we know that all three portfolios all averaged the same 1% return, the key point is that we don’t know what went on between the 10 years merely by looking at the 1% figure.

Take a look at the data and graphs below, and you’ll see three porftolios that behaved very differently indeed (click image below to enlarge):

(Note: the graphs above were generated using BonaVista Microcharts, an Excel add-in)

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Actively-managed vs. passive international stock funds

Mutual funds

Each week’s issue of Barron’s usually includes an interview with a fund manager or expert toward the end of the issue. Last week’s issue (dated September 18, 2006) featured an interview with Rudolph-Riad Younes (subscription required), co-manager of the Julius Baer International Equity Fund (symbol: BJBIX for Class A shares).

I’ve been interested in a while now in putting more money in investments outside the US market, so I read the article with a great deal of interest. Mr. Younes doesn’t seem to suffer from the rah-rah-there’s-money-to-be-made-here-there-everywhere kind of attitude that you sometimes find in interviews with fund managers.

His point of view appears grounded and he states some commonly held beliefs about the state of the current US economy, including that China and Asia are allowing the rest of the world “very low credit and very low interest rates”, that inflation should include housing and energy, that wage inflation isn’t here because people are “[using] their houses as ATMs”. All pretty standard stuff, but surprisingly not comments you hear nearly as often on typical talk US talk shows like CNN and CNBC.

His fund has performed well, and so I wanted to find out which stocks he recommended. They are the following:

Company Ticker Recent Price
Richemont CFR.Zurich Chf59.9
State Bank of India SBIN.Mumbai Inr976.5
HK Ruokatalo HKRAV.Helsinki Euro 10.44
Commerzbank CBK.Frankfurt Euro 27.23
Impact IMP.Bucharest Rol0.47

Hmm. Can you guess what my reaction was?

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Choosing and buying a bond fund

Mutual funds, Personal finance, Value investing

A couple of days ago, I decided to “invest-by-putting-a-toe-in-the-water” and bought some shares of (retail class, symbol LSBRX). To be honest with you, investing in bonds and bond funds are still a mystery to me, despite knowing how bonds work in theory.

Unless you have plenty of money (and time) to invest, buying individual bonds can be tricky. Instead, in order to obtain diversification within bonds, most investors choose to buy bond funds. As a complete newbie to bond investing, I definitely fell into this category. The purpose of many bond funds is to provide current income (in the form of dividend payouts), though some also aim for capital appreciation. The prospectus for LSBRX stated that it had both of these goals in mind.

Here’s the process I went through in deciding whether or not to invest in LSBRX:

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Carnival of Investing #30

Mutual funds, Personal finance, Value investing

Welcome to this week’s Carnival of Investing! We had several entries this week, which I’ve grouped into the categories below. (If you’re a contributor and would rather your article appear in a different category, feel free to let me know.)

Thank you to everyone who submitted a post. If your post did not appear, either I didn’t receive it, or it wasn’t directly related to investing. Next week’s carnival will be hosted by Free Money Finance. To learn about hosting, submission requirements, or to peruse archives, be sure to visit the Carnival of Investing’s home at MyMoneyBlog.


Stocks and Bonds

    My 1st Million at 33 has written a very nice .

    Stock Market Beat goes through a detailed example of accounts receivables monitoring related to .

    JeffSHoward explains the drawbacks and benefits of .

    InvestorGeeks teaches us the process he went through to .

    The Daily Bacon presents an elegant, chart-filled discussion comparing the , along with some explanations of their drivers.

    Financial Options summarizes financial events, earnings, and news releases coming up this week.

    Trader’s Narrative asks if having an unusually high ratio of gainers to decliners marks an upcoming bull run.

Real Estate

    “D”igital Breakfast has written a very informative post about .

    Debt Free presents the benefits and considerations you must face when deciding whether to .

    It’s Just Money asks how accurate is Zillow?

    Journey to Financial Freedom shares .

Foreign Investments

    China Law Blog is , and tells us why, point-by-point.

    Nubricks Property Blog highlights Bulgaria as a potential place to invest in property.

    Frugal Wisdom from Wenchypoo’s Warehouse talks about some regions in the world that might make for good investment in the future.

General Investment Advice

    Thinking About Money and its economic impact should it fall.

    Investing the Middle Way discusses in his continuing series on asset allocation.

    Abnormal Returns discusses the potential as mentioned in two recent publications.

    My Money Blog reviews the book .

    Get Rich Slowly reviews the book .

    Free Money Finance discusses .

    Pragmatic Finance reminds us the benefits of starting to invest early with a Roth IRA.

    Blueprint for Financial Prosperity reminds us it’s better to be conservative than wrong when it comes to bubbles.

    Young and Broke discusses financial phobia.

    Daily Dose of Optimism wonders what recent, ironic posts in the media mean for the commodities market.

    Investing World Today describes the basic steps of investing and money.

    Tick Marks tells us that day traders are still around.