Back in October, 2002, I published an article for Barclays Global Investors in which I discussed how to use long-term trends to identify fund categories that likely had the best prospects going forward.
In that article, I explained the reasons why you should seek out asset classes that are underperforming, NOT overperforming over five years as compared to their long-term asset category returns, but show positive performance trends over the last year or so. I then gave those fund categories I considered at the time to meet both these criteria: natural resources, real estate, international bonds, and Pacific/Asia excluding Japan.
I then made that article available at my web site at funds-newsletter.com for all investors who requested a free password at my site.
The good news: If, beginning in mid-October when my web site article appeared, an investor followed my advice investing equal amounts in each of the specific four funds I also recommended on my web site, their cumulative average return through May 8, 2003 would have been 11.4% over the ensuing less than 7 month period. This compares with an approximate 5.4% return for the S&P 500 Index. Here is the specific breakdown of returns in those funds over the period:
We have since reduced our recommendation for funds investing in Pacific/Asia as a result of the SARS crisis. Prior to the outbreak of SARS, the T Rowe Price New Asia Fund was up more than 10% from our mid-October article.
The bad news: Most fund investors remain far too skeptical as a result of the bear market and therefore aren't now usually willing to pay much heed to any investment advice, such as that in publications such as this one. In fact, only a tiny fraction of the visitors to my web site have availed themselves of the above article using the required password.
Given the continued importance of having some kind of investment strategy such found in this article for success as an investor, I am making the article available exclusively for readers of this article without the usual password. Just go to: http://funds-newsletter.home.att.net/barclay-no-pw-my.htm. Be sure to take advantage of the information that the largest institutional money manager and index fund manager in the world, Barclays, determined was significant enough to make available to their customers!