Never miss a trade! Sign up for MAXfunds Powerfund Portfolio’s FREE email alerts! CLICK HERE!

May 2002 performance review

June 15, 2002

Our other value stock pick besides the strong fund is the American Century Equity Income fund. We liked this fund a heck of a lot more a year ago, before it was flooded with new investor assets, but the fund still has some room to grow before it really begins to suffer. We're watching two things right now: asset levels and performance. If this fund breaks about $1.3 billion or so, or if we start seeing a slide in performance, we'll move into one of our backup choices.

We like inserting high-risk bond instruments into portfolios that are traditionally made up of 100% stocks and stock funds. Investors can add to their returns while lowering overall portfolio volatility by adding debt investments. In addition to our above junk bond choice, we've chosen the Fidelity New Markets Income fund for our "emerging market" bond fund choice. The fund's manager has been running the ship for more than 5 years - a rarity at Fidelity where fund manager turnover runs high. Reasonable fees and long-term, above-average performance in this sector make this fund hard to beat. We are not as ecstatic about emerging market debt as a few years ago, mostly because the area has had some nice returns of late. If there is ever another debt crisis that sends these types of funds down significantly, we'll beef up the position to 15% or so. Emerging market debt is one of the asset classes most uncorrelated to US stocks, adding diversification to a primarily stock-based portfolio.