Mutual Fund Investing
Best-Rated Financial Funds Built for a Rebound
Richard Widows
09/23/08 - 05:39 PM EDT
A rebound for investments in financial services will come a bit closer if Congress and the Bush administration get on the same track and implement a bailout plan. Even with a government package, there is no way to tell when financial investments will finally turn the corner. But if and when they do, the pair of funds on the accompanying table would be worth keeping in mind.
They represent the best-rated open-end financial mutual fund and financial exchange traded fund tracked by TheStreet.com Ratings.
As befits the current shape of the financial industry, the highest-rated open-end financial mutual fund, the Burnham Financial Industries Fund(BURFX Quote), currently rates a grade of C-plus from TheStreet.com Ratings.
BURFX represents a diversified approach to the financial sector. That doesn't seem to be a bad idea, considering the hammering that the banks, brokers and mortgage-related industries have suffered. Besides commercial banking giants JPMorgan Chase(JPM Quote) and Citigroup (C Quote), its top holdings include insurance giant Metropolitan Life Insurance(MET Quote), financial planning and services firm Ameriprise Financial(AMP Quote) and some S&L firms, mortgage organizations and smaller regional banking firms.
Top-rated financial ETF PowerShares Dynamic Banking Portfolio(PJB Quote) hasn't done that badly, considering that it passively tracks the Dynamic Banking Intellidex Index. In addition to JPMorgan Chase, its top holdings include Wells Fargo(WFC Quote), Comerica(CMA Quote), SunTrust Banks(STI Quote), UnionBanCal(UB Quote) and US Bancorp(USB Quote).
But given the abortive false starts experienced by financials after previous government rescue attempts, caution can't be stressed enough in approaching this sector. Whereas stocks typically recover months before the fundamentals of a group show any improvements, even with government help, there is no way to predict when things will turn upward for the financials. But when they do, the two funds in the nearby table should be kept in mind.
| Top-Rated Financial Funds by TheStreet.com Ratings |
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| Burnham Financial Industries A | PowerShares Dynamic Banking Portf | |
| Type of Fund | Open-End Mutual Fund | Exchange Traded Fund |
| Ticker | BURFX | PJB |
| TheStreet.com Ratings Grade | C+ | A |
| Total Net Assets ($million) | 61.6 | 174.9 |
| Inception Data | 4/30/2004 | 10/12/2006 |
| Total Expense Ratio (%) | 1.85 | 0.6 |
| Minimum Initial Investment | $2,500 | N/A |
| Max. Initial Sales Charge (%) | 5 | N/A |
| Year-to-Date Total Return (%) | 2.13 | 3.63 |
| 12-Month Total Return (%) | -1.78 | -6.85 |
| Three-Year Annual Return (%) | 6.66 | N/A |
| Source: TheStreet.com Ratings - Data as of 8/31/2008. For an explanation of our ratings, click here. | ||