Mutual Fund, ETF, and Financial Markets Update April 2015

In many ways, the first quarter of 2015 looked a lot like the last quarter of 2014. Oil prices continued to fall and the US dollar continued to rise. While the direction of both trends continued, the strength of the moves showed signs of slowing down. While the overall market gained 1.8%, size and style mattered this quarter. Small Cap Growth stocks picked up 6.6% while Large Cap value actually lost (0.7%). Quantitative easing by European central banks helped International Stocks pick up 3.5% in spite of the fact that the rising dollar provided a strong headwind. Bonds continue to perform well, even as investors speculate on when the US Fed is going to start raising interest rates.

Investment Returns as of March 2015

Investment Returns as of March 2015

Our best performing bond funds were the two International Bond funds that hedge against the US dollar as both Payden Global Fixed Income (PYGFX) and PIMCO Foreign Bond (USD-Hedged) (PFODX) gained 2.5%. SEIX Floating Rate High Income (SAMBX) was not far behind with a 2.4% return, while Fidelity Total Bond (FTBFX) picked up 1.9%.

It was a good quarter for most stock funds, in spite of a difficult March for many. Some of our best performers were Fidelity Focused Stock (FTQGX) with a 4.8% return, Scout Mid Cap (UMBMX) with a 6.0% gain, and Rice Hall James Micro Cap (RHJSX) which added 6.6%. FMI International (FMIJX) was our best Non-US fund with a 7.9% return, while AMG Managers Real Estate Securities (MRESX) was our top sector fund with a 6.7% gain. Our best performer was Credit Suisse Managed Futures Strategy (CSAAX) which added 10.9% in the first three months of 2015.

Falling interest rates helped push iShares Barclays 20+ Year Treasury Bond ETF (TLT) up 4.2% while a rebound for Emerging Market Bonds pushed iShares JPMorgan Emerging Markets Bond ETF (EMB) up 2.9%. On the other hand, the dollar’s continued strength contributed to a difficult quarter for developed country bonds as PowerShares International Corporate Bond (PICB) fell (6.5%).

Some of our better performing stock ETFs were PowerShares Buyback Achievers (PKW) which gained 2.7%, iShares S&P MidCap 400 Growth Index (IJK) which added 7.7%, and iShares Russell 2000 Growth Index (IWO) which rose 6.7%. There was quite a contrast between country ETFs this quarter as iShares MSCI Japan Index (EWJ) returned 11.5% which iShares MSCI Brazil Index (EWZ) lost (14.2%).

Our top sector ETF in the first quarter was SPDR S&P Biotech (XBI) which picked up 21.1%, while PowerShares DB Agriculture (DBA) (11.1%) as commodities continued to lose ground. PowerShares DB US Dollar Index Bullish (UUP) was up 8.1% this quarter. That does not sound like a lot compared to some of the real big movers, but for the US Dollar that’s quite a significant move. That’s quite a headwind for investors looking for returns outside of the United States.

Our Favorite Mutual Funds April 2015, Favorite ETFs April 2015, Mutual Fund Portfolios, ETF Investment Portfolios,, and Favorite Fidelity Funds have been updated through March 2015.