New Mutual Funds Look Abroad For Better Gains
Mutual fund companies are looking abroad for inspiration, as these three new overseas funds show. Although investors are encouraged to own some foreign shares to balance domestic portfolios, they should expect interim volatility and plan to hold shares for the long term.
That is because overseas securities are subject to additional risks, like currency and political shifts.
The T. Rowe Price Emerging Markets Bond Fund will own highyielding government and corporate bonds issued in Latin America, central Europe, Asia and Africa. The fund will hedge some risk by buying short- and intermediateterm bonds.
The sponsor, T. Rowe Price Associates Inc., can be reached at 1-800-638-5660. There is no sales charge but there is a minimum investment of $2,500, $1,000 for IRAs.
The Lexington Global Income Fund invests in a complete package of bonds from emerging markets, established foreign markets and the United States. The fund is a joint venture with Maria Fiorini Ramirez, who heads a global economics consulting group.
Lexington Management Corp. can be reached at 1-800-526-0056. There is no sales charge. The minimum investment is $1,000, $250 for IRAs.
The IAI Developing Countries Fund aims for long-term capital appreciation by owning equities of companies in developing markets that are growing rapidly. The minimum investment has been reduced temporarily to $1,000 from $5,000.
Investment Advisers Inc. can be reached at 1-800-945-3863. There is no sales charges.
Fund gives bears a hedge
If you’re worried about the market in the next few months, don’t sell your long-term stock holdings. Instead, consider a tactic the big guys use: hedging. Balance your stock positions with short-term investments that benefit from a market decline.
Stephen Leeb, whose newsletter The Big Picture made recommendations that produced a 9.9 percent gain in 1994, suggests buying Rydex Ursa, a mutual fund that gains as stocks fall, or selling short S&P Depositary Receipts (SPDRs), bundles of stocks that reflect the movement of the market as a whole.
SPDRs trade like stocks on the American Stock Exchange. But don’t go overboard. Leeb’s bearish, but not too bearish.