No Load Fund/ETF Investing: Avoiding Mediocrity In A Hot Sector

MarketWatch had a piece called “Avoid Mediocre Funds In Hot Sectors.” Finally, it’s a story I can agree with because being in a great performing sector should be every investor’s goal. However, just because a sector is hot, does not mean that every fund/ETF in it is performing up to par.

The article states to sell a few funds that apparently are not great performers. In particular, they are recommending selling PRGFX (my M-Index rating is +10), VWUSX (+10) and DEFIX (no rating available).

Instead, you are supposed to be buying TMGFX (+15), JORNX (+18) and JAVLX (no rating available). While these funds maybe OK replacements based on my momentum numbers, there are some that are even superior performers.

If you utilize my weekly StatSheet on a regular basis, you would have known that, for example, funds like WLGYX (+20), BSMAX (+20) and TWHIX (+19) have stronger momentum numbers and have performed better.

While chasing performance is generally frowned upon by Wall Street’s talking heads, it’s a great way to grow your portfolio as long as it is used in conjunction with a clearly defined exit strategy to protect you from too much downside risk.

I am obliged to tell you that from the list of funds above, I and my clients have positions in WLGYX only.

About Ulli Niemann

Ulli Niemann is the publisher of "The ETF Bully" and is a Registered Investment Advisor. Learn more
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