Don't be lured in by niche ETFs
(MONEY Magazine) -- History says that if you show enough interest in an investment, the financial industry will keep churning out newer versions, even after it has run out of sensible ideas. Think back to the late '90s, when mutual funds were hot and fund companies came up with "theme" funds -- remember the StockCar Stocks index fund, which bet on NASCAR-related businesses?
Well, exchange-traded-fund providers, which have attracted $433 billion since January 2008, have reached a similar point.
), which bets on makers of iPhones, BlackBerrys, and the like. There's plenty more. As a recent slogan from iShares says: "We'll stop making ETFs when you stop having ideas."Before you challenge the industry to follow through on that promise, though, ask yourself the following questions:
Why is it coming out with these narrowly cast funds now?
Chances are, it's because the themes have been on a huge roll. Cermaq ASA, which makes fish feed and is a top holding in FISN, has doubled in value in less than two years. Potash Corp., ( ) which is a leading fertilizer maker and is in SOIL, has returned 33% a year over the past 10 years. Both businesses help feed the rapidly developing emerging markets, whose stocks have been hot for a decade.
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Since it can take years to launch an unusual ETF, the funds could be a sign that this run is nearing an end (since early April, emerging-market stocks have fallen 9%).
Is the ETF likely to survive?
A new ETF that tracks a narrow theme or industry faces steep odds of survival. Many don't attract enough assets to be profitable (typically, that's about $50 million). More than 50 ETFs have been liquidated since January 2010, including the JETS Dow Jones Islamic Market International index fund.
Does it fit your strategy?
When you're tempted by a new investment, it's easy to lose sight of the big picture, which is your overall asset mix.
Be honest: Do you really think what your 401(k) needs is more fish or fertilizer? Matt Hougan, senior editor of IndexUniverse.com, says there's a timeless lesson here: Be wary of putting any money in a brand-new fund, especially if it's designed to capitalize on the latest trends.
Sure, the StockCar fund may have sounded intriguing when it was launched in October 1998 amid a national NASCAR craze. But with only around $6 million in assets at its peak, the fund ran out of gas and was liquidated last year.
Mutual Fund History - News
Think back to the late '90s, when mutual funds were hot and fund companies came up with "theme" funds -- remember the StockCar Stocks index fund, which bet on NASCAR-related businesses? Well, exchange-traded-fund providers, which have attracted $433
For those unfamiliar with the history of index funds, Bogle's Folly is the Vanguard 500 , the world's first index mutual fund. On Aug. 31, 1976, it launched as the First Index Investment Trust with
Traders said the big downward moves have been driven in large part by an exodus from stocks by mutual funds and pension funds. The big up days are largely being driven by a small number of bargain hunters and by maneuvering by hedge funds, they said.
Nationwide Funds Group, the company's mutual fund division, reported $41.7 billion in assets under management while life insurance-in-force was $207 billion. Nationwide Bank continued to enjoy strong momentum in the first half of 2011, reporting total
The big downward moves of late have been driven in large part by an exodus from stocks by mutual funds and pension funds. The big up days are largely being driven by a small number of bargain hunters and maneuvering by hedge funds.
TATA Mutual Fund Dividend History – Benefits | NY Zone Exchange
Different types of mutual funds include equity funds which invest majority of funds into equity, debt funds that invest in debt papers, balanced mutual funds which are a combination of equity and debt funds, growth schemes where gains are reinvested, dividend funds that distribute part of gains to investors form time to time, SIP funds where you can invest regularly and many others. How do you decide which fund or scheme to invest in? Determine your goals first like whether you want a stable income or high returns, short term investment or long term capital gains etc. Based on your long term plans you need to decide your investment portfolio. The schemes that yield dividends are great options if you are looking for ways to reduce taxes. Dividend income that is generated by equity mutual funds happens to be completely tax free. Long tern capital gains on any asset held for less than a year is also tax free. Moreover there is no dividend distribution tax or fee. One concern for investors is that distribution of dividend also decreases the size of fund amount and leads to drop in Net Asset Value. But remember that dividend declarations also attract many new investors to the pool. If you are convinced about investing in dividend yield MF then check up on dividend history of the funds online. Dividend history tracks dividend payments made by particular funds over a period of time making it easier to locate schemes which have generated ever-increasing dividends in the past. This is good way to predict future performance of MF dividends. Here are some dividend funds from Tata Mutual Fund that you may decide to invest in.
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