January's Top-Rated Funds

Here are some of the funds that outperformed their peers last month.
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Bond Fund Analysis by Sam Patel

The top 10 list of bond funds for the month of January 2008 shows the state of the economy, with the Treasury market rallying on the short end following the slashing of rates by the

Federal Reserve

. This helped boost returns of Tax Free Money Market Funds, which accounted for the majority of funds in our list.

Fund Name

Ticker

1 Month Return

1 Year Return

3 Year Return

Category

Evergreen Inst US Govt MM Inv

EGNXX

0.33

4.75

4.19

Tax Free Money Market

US Govt Securities Savings Fund

UGSXX

0.3

4.58

4.02

Tax Free Money Market

UMB Scout Federal Money Market Inv

UMFXX

0.3

4.52

3.96

Tax Free Money Market

Colorado Bond Shares Tax-Exempt A

HICOX

0.84

5.71

5.55

Municipal - Single State

Calvert Social Invest MM Cl O

CSIXX

0.3

4.53

4.13

Tax Free Money Market

Monetta Trust-Govt Money Market

MONXX

0.33

4.75

4.01

Tax Free Money Market

Fidelity Treasury Capital Reserves

FSRXX

0.21

3.92

3.52

Tax Free Money Market

Vanguard Lmtd-Term Tax-Exempt Inv

VMLTX

1.69

6.06

3.52

Municipal - National

Federated Money Market Mgt Eagle Sh

MMMXX

0.36

4.36

3.55

Tax Free Money Market

Vanguard Short-Term Tax-Exempt Inv

VWSTX

1.11

5.12

3.39

Municipal - National

(All funds above carry a TSC rating of A+.)

In short, money came off the table as fear and risk gripped the market.

The table below shows Loan Participation Funds dominated the list in January 2007 but with the gradual unwinding of the subprime issues, and the instability of debt market in general, investors responded by moving to the other end of the risk spectrum in 2008 and embracing money market funds.

Loan Participation funds invest predominantly in bank loans made to low credit rated companies. This is a higher risk situation that attracts a higher return. Investors were very keen on these funds back in 2007 when the economy and the debt markets were significantly more stable and risk and fear were nowhere to be seen. One year later, and there has been a complete reversal in risk appetite.

Fund Name

Ticker

Category

Highland Floating Rate Advantage A

XSFRX

Loan Participation

Colorado Bond Shares Tax-Exempt A

HICOX

Municipal - Single State

Highland Floating Rate Fund A

XLFAX

Loan Participation

Evergreen FL High Income Muni I

EFHYX

Municipal - Single State

Oppenheimer Sen-Floating Rate C

XOSCX

Loan Participation

Van Kampen Senior Loan Fund IC

XSLCX

Loan Participation

Morgan Stanley Prime Inc Trust

XPITX

Loan Participation

Van Kampen Senior Loan Fund IB

XPRTX

Loan Participation

Evergreen Inst US Govt MM Inv

EGNXX

Tax Free Money Market

Eaton Vance Sr Floating-Rate Inst

EIFRX

Loan Participation

Stock Fund Analysis by Kevin Baker

As of Jan. 31, the top-rated open-end stock fund this month is the

Permanent Portfolio Fund

(PRPFX) - Get Report

. The fund's stated objective is to preserve long-term purchasing power with a portfolio of gold, silver and Swiss francs as well as natural resource companies.

This is just the type of portfolio you would expect to do well in these jittery times. Below are the other funds making our top 10 list.

The second-place fund,

Ivy Asset Strategy Fund

(WASAX) - Get Report

, hit the right mix of sectors with 11.3% mining, 10.9% diversified financial services, 9.4% telecommunications, 5/9% oil and gas, 5.4% alternative energy sources and 4.4% agriculture.

This past year was the right time to be long a global portfolio of fund holdings such as

Monsanto

(MON)

up 120.43%,

Rio Tinto

(RTP)

up 103.59%,

Nintendo

(NTDOY)

up 69.13%,

Transocean

(RIG) - Get Report

up 68.41% and

Sunpower

(SPWR) - Get Report

up 48.85%.

The

PIMCO All Asset All Authority A Fund

(PAUAX) - Get Report

is included in the list of stock funds, even though it has only about one-third of 1% invested directly in equities, because it's a fund of PIMCO funds, some of which are PIMCO StockPlus funds that track various international equity indices with the use of derivative securities.

Finally, it is notable that a contrarian fund such as the

Prudent Bear Fund

(BEARX) - Get Report

managed to climb into the top 10 by selling short equities securities.

The fund does bet on some stocks going up, mostly Canadian mining shares. Over the last 12 months, holdings such as

Canplats Resources

(CPQRF)

soared 614%,

Duran Ventures

(DUVNF)

leaped 391% and

East Asia Minerals

(EAIAF)

popped 292%.

Fund (Ticker) Rating

Total Return 3 Year

Total Return 1 Year

Total Return 1 Month

Investment Objective

Permanent Portfolio Fund (PRPFX) A+

13.09%

13.53%

2.64%

Asset Allocation - Domestic

Ivy Fund-Asset Strategy A (WASAX) A+

26.80%

35.86%

-2.41%

Asset Allocation - Domestic

Pinnacle Value Fund (PVFIX) A+

11.34%

8.16%

-2.70%

Growth - Domestic

J Hancock Balanced A (SVBAX) A+

16.15%

18.24%

-3.00%

Balanced - Domestic

PIMCO All Asset All Authority A (PAUAX) A+

7.34%

13.19%

3.10%

Asset Allocation - Domestic

BB&T Equity Income A (BAEIX) A+

13.58%

4.92%

-2.07%

Equity Income

Prudent Bear Fd (BEARX) A+

9.07%

17.78%

2.39%

Growth - Domestic

BlackRock Glb Allocation Inv A (MDLOX) A+

14.12%

14.14%

-1.72%

Asset Allocation - Global

Fidelity Adv Consumer Staples A (FDAGX) A+

12.91%

10.73%

-6.00%

Growth - Domestic

AllianceBern Utility Income A (AUIAX) A+

18.30%

13.89%

-5.72%

Sector Fund - Utility

Source: TheStreet.com Ratings - Jan. 31, 2008 Data.

Read this for an explanation of our ratings,

click here.

ETF Analysis by Richard Widows

With the domestic equity markets sagging, the economy stagnating and the ever-deepening credit crunch eroding whatever faith remains in the U.S. dollar, an eclectic group of exchange-traded funds emerged as the highest ranked in that investment category by TheStreet.com Ratings.

While fixed-income funds comprise only a small fraction of exchange-traded funds, four bond offerings populate the accompanying list of the 10 highest rated ETFs. They represent the conservative extreme of the list, as two invest in Treasury securities and two in a combination of government notes and higher-rated corporate debt.

The persistent weakness in the U.S. dollar, combined with lofty commodity prices, propelled two precious-metals funds to the top ratings roster. One focuses solely on gold while the

PowerShares DB Precious Metals Fund

(DBP) - Get Report

invests 80% in gold futures and 20% in forward silver contracts.

The sinking dollar lifted two currency funds into the top 10. Investor uneasiness about the greenback are especially reflected in the strength of the

Currency Shares Swiss Franc Trust

(FXF) - Get Report

, which places its assets in what has traditionally been among the strongest and most stable currencies around.

Topping out the 10 highest rated ETFs are two "inverse" funds, each "short" a popular small-cap stock index.

The pair of precious-metals funds on the list, along with the two inverse small-cap ETFs, have each enjoyed double-digit gains during the most recent three calendar months, a period when the general stock market has moved relentlessly downhill.

This article was written by staff members of TheStreet.com Ratings.