trading mutual funds

Are there well-known financial professionals who believe that it is
reasonable and advisable to regularly trade in and out of a mutual fund
based on some technical or fundamental methodology?

Re: trading mutual funds

"Anon" <
> Are there well-known financial professionals who believe that it is
> reasonable and advisable to regularly trade in and out of a mutual fund
> based on some technical or fundamental methodology?

Yes.

Re: trading mutual funds

Ed wrote:

> Yes.

Like who?

Re: trading mutual funds

Well-known notorious ones, yes.

Well-known reputable ones, no.

Studies indicate chasing returns using price movements is a losing strategy.

Watch the vitriol dumped on this post, and consider how it is symptomatic of
gamblers in denial.

Ask your question at misc.invest.financial-plan for a dose of reality.

"Anon" <> wrote
> Are there well-known financial professionals who believe that it is
> reasonable and advisable to regularly trade in and out of a mutual fund
> based on some technical or fundamental methodology?

Re: trading mutual funds

Anon wrote:

> Ed wrote:
>
>
>>Yes.
>
>
> Like who?

Quite a few. I suggest you read Hulbert's Financial Digest, which
reviews various investment newsletters, some of which specialize in
mutual funds.


--
Steven D. Litvintchouk
Email:

Remove the NOSPAM before replying to me.

Re: trading mutual funds

"Anon" <
> Ed wrote:
>
>> Yes.
>
> Like who?

Janet Brown for one.

Re: trading mutual funds

"Elle" <> wrote

> Well-known notorious ones, yes.
>
> Well-known reputable ones, no.

Get out the hip boots, Elle's mouth is open.

Re: trading mutual funds

"Ed" <> wrote in message
news:
>
> "Anon" <
>> Ed wrote:
>>
>>> Yes.
>>
>> Like who?
>
> Janet Brown for one.
>
>
>
>
It looks quite interesting but they don't tell you how they rank the funds,
except in a very general and unusable way. This is what they sell to their
subscribers, of course, so they are not going to give it away.

However, the general lines seem to be high performance and low volatility,
which is almost the same as proposed by Gerald (MACD) Appel in his book
"Technical Analysis". On page 18 he quotes his own newsletter "Systems and
forecasts" at www.Signalert.com and the "No-Load Fund X" one given in the
URLs above at www.NoLoadFundX.com.

Appel's method in the book is to a) Choose the funds with volatility lower
than the S&P500. b) Rank them in order of performance over the last 3 months
and buy from 2 to 5 funds in the top 10%, choosing no-loads and funds with
no redemption fees for holding periods of at least 90 days. c) Review every
3 months and sell any funds no longer in the top 10% replacing with other
funds that are.

Over 1990-2003 the top decile funds by this method averaged 14.1% return as
against 10.8% for the S&P500 and 4.6% for the bottom decile funds (those
with the worst performance over the previous 3 months). The maximum drawdown
for the top decile funds was 20.3% as against 44.7% for buy-and-holding the
S&P500, so risk is reduced as well as return being increased.

Dropping the low volatility requirement gave a slight improvement in gain
for the top decile based on 3-month relative strength to 14.7% but increased
drawdown to 25.7%, which is still well below the drawdown for B&H with the
S&P500.

Re: trading mutual funds

"David Wilkinson" <> wrote

> Appel's method in the book is to a) Choose the funds with volatility lower
> than the S&P500. b) Rank them in order of performance over the last 3
> months and buy from 2 to 5 funds in the top 10%, choosing no-loads and
> funds with no redemption fees for holding periods of at least 90 days. c)
> Review every 3 months and sell any funds no longer in the top 10%
> replacing with other funds that are.

I thought of trying something like this with PowerShares the problem is
getting started.

Re: trading mutual funds

"Ed" <> wrote in message
news:
>
> "David Wilkinson" <> wrote
>
>> Appel's method in the book is to a) Choose the funds with volatility
>> lower than the S&P500. b) Rank them in order of performance over the last
>> 3 months and buy from 2 to 5 funds in the top 10%, choosing no-loads and
>> funds with no redemption fees for holding periods of at least 90 days. c)
>> Review every 3 months and sell any funds no longer in the top 10%
>> replacing with other funds that are.
>
> I thought of trying something like this with PowerShares the problem is
> getting started.
>
>
Don't you have the 3-month returns and volatilities and a way of sorting the
funds or ETFs?

I could see a problem, though, with only about 40 funds and those mostly
sector and specialist funds or ETFs. It could be that none of them has a
lower volatility than the S&P500 or only a few.

Suppose only 10 had a lower volatility and you then ranked them in 3-month
return order. There would only be one fund in the top decile, by definition,
and this might be a very specialist ETF in something like gold. Could be
very risky to put a lot of investment into one sector. It could pay off but
it might tank. It is quite possible the low volatility criterion would stop
this, though, by eliminating all the specialist sector ETFs so it would not
happen and you would get no funds past the screens.

I don't think this is what Appel did or had in mind. He used all the funds
available in the US which he says went from 500 in 1990 to 3,000 in 2003.

Re: trading mutual funds

"David Wilkinson" <> wrote
>
> "Ed" <> wrote in message
> news:
>>
>> "David Wilkinson" <> wrote
>>
>>> Appel's method in the book is to a) Choose the funds with volatility
>>> lower than the S&P500. b) Rank them in order of performance over the
>>> last 3 months and buy from 2 to 5 funds in the top 10%, choosing
>>> no-loads and funds with no redemption fees for holding periods of at
>>> least 90 days. c) Review every 3 months and sell any funds no longer in
>>> the top 10% replacing with other funds that are.
>>
>> I thought of trying something like this with PowerShares the problem is
>> getting started.
>>
>>
> Don't you have the 3-month returns and volatilities and a way of sorting
> the funds or ETFs?
>
> I could see a problem, though, with only about 40 funds and those mostly
> sector and specialist funds or ETFs. It could be that none of them has a
> lower volatility than the S&P500 or only a few.
>
> Suppose only 10 had a lower volatility and you then ranked them in 3-month
> return order. There would only be one fund in the top decile, by
> definition, and this might be a very specialist ETF in something like
> gold. Could be very risky to put a lot of investment into one sector. It
> could pay off but it might tank. It is quite possible the low volatility
> criterion would stop this, though, by eliminating all the specialist
> sector ETFs so it would not happen and you would get no funds past the
> screens.
>
> I don't think this is what Appel did or had in mind. He used all the funds
> available in the US which he says went from 500 in 1990 to 3,000 in 2003.

Funds are very restictive now, it would be hard to do that.
ETF's might still work. PowerShares are only a fraction.

Re: trading mutual funds

"Ed" <> wrote in message
news:
>
> "David Wilkinson" <> wrote
>>
>> "Ed" <> wrote in message
>> news:
>>>
>
> Funds are very restictive now, it would be hard to do that.
> ETF's might still work. PowerShares are only a fraction.
>
>
>
I double-clicked on the 3-month return column to sort them and the top 5
were PXJ Oil & Gas, PBW Clean energy, EEM Emerging markets, ADRE Emerging
markets and PSI Semiconductors. There was nothing visible about volatility,
though, unless I missed it. They could be winners though on Appel's second
method where he drops volatility as a criterion. You have to be prepared to
rebalance after 3 months and replace any of these that are then not in the
top 10%.

Re: trading mutual funds

"David Wilkinson" <> wrote

> I double-clicked on the 3-month return column to sort them and the top 5
> were PXJ Oil & Gas, PBW Clean energy, EEM Emerging markets, ADRE Emerging
> markets and PSI Semiconductors. There was nothing visible about
> volatility, though, unless I missed it. They could be winners though on
> Appel's second method where he drops volatility as a criterion. You have
> to be prepared to rebalance after 3 months and replace any of these that
> are then not in the top 10%.

The problem here is that PXJ & PBW already took a hit this month.

Re: trading mutual funds

"Ed" <> wrote in message
news:
>
> "David Wilkinson" <> wrote
>
>> I double-clicked on the 3-month return column to sort them and the top 5
>> were PXJ Oil & Gas, PBW Clean energy, EEM Emerging markets, ADRE Emerging
>> markets and PSI Semiconductors. There was nothing visible about
>> volatility, though, unless I missed it. They could be winners though on
>> Appel's second method where he drops volatility as a criterion. You have
>> to be prepared to rebalance after 3 months and replace any of these that
>> are then not in the top 10%.
>
> The problem here is that PXJ & PBW already took a hit this month.
>
>
I can't get anything except a one-day chart out of Finance-Yahoo for these
so I can't see how big the hit was. However, whatever it was is already in
the 3-month relative strength values and the method does not have anything
about performance in the last month. These broad-brush screening methods are
not going to be infallible nor will they work for every fund. They are just
supposed to give you an edge on average over the market and tilt you towards
better future performers.

You might note that in your contest I am using a vaguely similar screen for
stocks, which is actually the 10 FTSE100 stocks with the best 1-year RS
subject to P/E < 20, and the portfolio is doing pretty well.

Re: trading mutual funds

"David Wilkinson" <> wrote

> I can't get anything except a one-day chart out of Finance-Yahoo for these
> so I can't see how big the hit was. However, whatever it was is already in
> the 3-month relative strength values and the method does not have anything
> about performance in the last month. These broad-brush screening methods
> are not going to be infallible nor will they work for every fund. They are
> just supposed to give you an edge on average over the market and tilt you
> towards better future performers.

I owned both of those and made a few dollars with each. Each went down after
I sold them but are up a little since.

> You might note that in your contest I am using a vaguely similar screen
> for stocks, which is actually the 10 FTSE100 stocks with the best 1-year
> RS subject to P/E < 20, and the portfolio is doing pretty well.

You are doing very well. I'm catching up.