TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.
Funds that focus on regions and precious metals topped the one-month performance list. The common theme is the fear of inflation in the U.S. weakening the dollar.
Treasury Secretary Timothy Geithner won't acknowledge that quantitative easing, the buying of U.S. Treasury debt by the Federal Reserve with newly created money, is essentially monetizing the debt and diluting the buying power of the U.S. dollar. However, investors just don't believe inflation can remain low and stable over the near future as deficits skyrocket.
As the dollar falls, precious metals priced in U.S. dollars ascend. In May, the spot price of gold rose $90.95 to $979.15 per ounce, the highest level since late February. Spot silver added $3.37 an ounce to reach $15.74.
The best-performing stock mutual fund in May,
ProFunds Precious Metals UltraSector ProFund
, soared 51% in one month. The hottest members of the
Dow Jones Precious Metals Index
, to which the fund is 150% leveraged, showed returns of 40% in
, 37% in
, and 32% in
. But, none of these miners beat the 44% gain in
. (See my
In my recent article on
, I examined foreign funds that look more attractive when the U.S. dollar weakens. Four of the seven best-performing funds specialize in the stocks of India, whose currency, the rupee, has strengthened by 6.4% against the U.S. dollar.
Indian stocks doubling in value that helped the
Matthews India Fund
to a gain of 40% were
Financial Technologies India
, up 105%;
, up 101%; and
SREI Infrastructure Finance
, up 100%.
Many of the largest foreign companies are natural-resources plays securing higher prices for their commodities. Up 45% in May,
ProFunds UltraLatin America
benefited from gains of 47% from Brazilian steel producer
, 36% from Mexican cement producer
, 34% from Peruvian gold miner
Cia de Minas Buenaventura
and 31% from Brazilian oil producer
Kevin Baker became the senior financial analyst for TSC Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering mutual funds. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.