A Portfolio for Those Who Just Give Up
Rydex Managed Futures Fund (RYMFX) -- 30% .
I have written about this fund several times as a vehicle for absolute return that should do its thing regardless of what the stock market is doing. The fund allocates 50% to commodity futures and 50% to financial futures, then goes long or short various components from each segment on the basis of seven-month relative strength.
Over the last year, it is up 7% vs. a 15% decline for the S&P 500. The fund is down over the last six weeks or so, as it was long the energy complex, which turned course suddenly and has been moving lower.
Templeton Emerging Markets Income Fund (TEI) -- 20%.The track record for this fund is long and phenomenal. The net asset value of the fund has had only two down years since inception in late 1993. In 1998, during the Asian contagion, the NAV was only down 8.95%. The market price has had three down years since inception. The fund is currently trading at a 5.7% discount to NAV with a 7.29% yield. The fund is heaviest in Brazil at 19.7%, is invested in Indonesia at 11.60%, and interestingly, it even has a position in bonds from Iraq. The segment is obviously volatile, but buying this fund simply expresses a belief that the management can continue to navigate the space successfully; 14 years of track record leads me to believe that it can. I believe TEI can offer equitylike total returns without being correlated (PortfolioScience.com has the correlation at 0.41 to the S&P 500) to the U.S. markets.
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