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This week's Mutual Funds and ETF stories
By MarketWatch
Last Update: 7:33 PM ET Mar 11, 2010
Don't miss these top money and investing columns:
Profit in the bull's second year
Fund investors still fearful
Where are Internet-fund superstars now?
Buffett outdoes all funds
Fresh start for fund firms
It's been a year since the stock market started to rebound, and 10 years since the Internet bubble burst. Investors can learn good lessons from both milestones.
If history is a guide, Year Two of the bull market will finish higher as well. In a rally's first year, small-cap and midcap stock funds typically beat large-cap rivals, though a rising tide lifts all boats. In addition, low-quality stocks generally outdo high-quality ones as investors get more comfortable with risk.
During the bull's second year, historically, stock funds keep rising, though not as powerfully. One big change: Higher-quality issues with stable and growing earnings tend to trump lower-quality names. Among the best sectors in that second year: consumer discretionary, financials, technology and industrials. One wild card this year: health care.
Investors are also marking a less-happy anniversary: The bursting of the Internet bubble in 2000. Technology-fund managers at the time were media celebrities, highly sought seers with their finger on the Internet's pulse and promise. Ten years later, technology stocks still captivate investors, but those dot-come supernovas are gone -- taking many of those former fund superstars with them.
In hindsight, it's clear that many of the tech-bubble survivors didn't operate as if the rules of business had changed, that sales and earnings no longer mattered. Those companies today are older, wiser -- and stronger. That's worth remembering whenever someone says "This time, it's different."
-- Jonathan Burton, Money & Investing editor
SPECIAL FOCUS: MARKET MILESTONES
How to make money in the bull market's second year
Happy birthday, baby bull. So far you're one for the storybooks. What can investors expect in Year Two? If history is a guide, the second verse will echo the first.See full story.
Fund investors still wary of stocks
Ask most financial professionals and they'll tell you the same thing: Investors flee the stock market and then jump back in, but too late for their own good. The evidence of the past year seems to support that view, as new money coming to stock mutual funds has been negligible even as returns have been among the best on record.See FundWatch.
Whatever happened to the superstar Internet-fund managers?
They were masters of a parallel universe, the soul-mates of a new technology. Then the real world intruded on mutual fund managers who'd been Poseidons astride the Internet-stock wave. Where are these tech-stock superstars now, 10 years after the Internet tsunami came crashing down?See Mutual Understanding.
Real estate ETFs build from the ground up
Exchange-traded funds tracking real estate stocks have been among the market's best performers since the March 2009 market low, but the potential for more upside is on shaky ground.See ETF Investing.
Don't be fooled by funds' short-term gains
You may not be celebrating the one-year anniversary of the stock market bottom this Tuesday, but mutual fund executives are, because their worst 12-month period in recent history is closer to becoming a bad memory.See Chuck Jaffe.
Fresh start for fund firms
The one-year anniversary of the bear-market bottom is a great day for mutual-fund managers as it may remove negative performance figures from their one-year record. Chuck Jaffe offers investors tips to stay ahead of the industry's games.Watch the video about funds getting a clean slate
Bull's first year holds lessons
What a difference a year makes. I last wrote those words on Oct. 8, 2008, one year after the U.S. stock market peaked. This time, the occasion is happier.See John Prestbo's Indexed Investor.
INVESTING TRENDS
Buffett and Berkshire outperform all funds
Many investors can only look on with envy when Warren Buffett says his shareholders have seen 20% annualized gains over the past 45 years -- even the best mutual funds pale by comparison.See FundWatch.
Five reasons to invest in European stocks
As Europe's governments scramble to control budget deficits and spending, investors may be overlooking companies made attractive by a weak euro, aggressive cost cutting and cheap valuations, among other factors.See Global Investor.
Specialty apparel retailers are a good fit for manager
Consumer confidence is mixed at best, sapping many investors' expectations for a strong economic recovery. That hasn't stopped Lawrence Creatura from shopping for shares of specialty retailers.See The Stockpickers.
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