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Thoughts on Best Mutual Funds for a Low-Growth Global Economy
Hi Shostakovich, it wasn't quite clear to me whether you were looking for an investment for the next 30-35 years or whether you're just looking for something for some portion of that time while growth is "low".
In the very long-term I think emerging and frontier markets are the place to be. They have favorable demographics, they're growing faster than the rest of the world, they're implementing necessary reforms that will make their markets more and more attractive, and some of them are gaining more and more importance and will most likely end up being dominant economies of the world. I'd rather not focus on the commodity dependent markets so I own funds like WAFMX, MEASX and GPEOX that are more interested in the rising middle class and consumer oriented investments.
In the shorter term I'd focus more on the places where central banks are aggressively easing monetary policy because I think it will lead to multiple expansion even if it doesn't drive fantastic growth. So far my choices for new investments have been HEDJ and DXJ because I believe there's value in hedging the currency exposure, but the un-hedged international funds I own are still outperforming their US counterparts. That doesn't mean to say I've given up on the US, but I've been shifting more assets towards Europe and Japan than I had previously. China is also easing monetary policy pretty aggressively and I like China long-term but I'm not making shorter-term China specific bets because I feel like the volatility is a lot higher than elsewhere.
The headline suggests you are looking for a fund or funds that would do well in a low growth environment. I believe that it would have to be multiple funds to achieve your goal. LLJB has a good suggestion on emerging/frontier markets. You would need international exposure as well as broad exposure to different facets of the market both domestic and international.
Okay, so lots of people ask this question, but first ask yourself another question. Will you really hold this fund for 35 years.
Also, you mention low growth environment for 35 years...we HAVE to be more confident than that. Regardless...
IF answer to my first question is YES, you want a fund that you expect to be around after 35 years, will have decent succession planning. So you need to look at measure players. You need it to be well diversified. I have two recommendations for you. These are fairly new funds, launched after careful consideration I would think. You can expect the fund company having a lot invested in their success and them not being passing fads
Vanguard Global Minimum Volatility - VMVFX TRP Global Allocation - RPGAX.
I own both of them, and I don't want to live on this planet for 35 years, but I'm unlucky these are what I would likely leave my grandchildren...if they are well behaved.
Comments
Regards,
Ted
http://money.usnews.com/funds/mutual-funds/rankings/large-growth?int=9ed708
In the very long-term I think emerging and frontier markets are the place to be. They have favorable demographics, they're growing faster than the rest of the world, they're implementing necessary reforms that will make their markets more and more attractive, and some of them are gaining more and more importance and will most likely end up being dominant economies of the world. I'd rather not focus on the commodity dependent markets so I own funds like WAFMX, MEASX and GPEOX that are more interested in the rising middle class and consumer oriented investments.
In the shorter term I'd focus more on the places where central banks are aggressively easing monetary policy because I think it will lead to multiple expansion even if it doesn't drive fantastic growth. So far my choices for new investments have been HEDJ and DXJ because I believe there's value in hedging the currency exposure, but the un-hedged international funds I own are still outperforming their US counterparts. That doesn't mean to say I've given up on the US, but I've been shifting more assets towards Europe and Japan than I had previously. China is also easing monetary policy pretty aggressively and I like China long-term but I'm not making shorter-term China specific bets because I feel like the volatility is a lot higher than elsewhere.
Also, you mention low growth environment for 35 years...we HAVE to be more confident than that. Regardless...
IF answer to my first question is YES, you want a fund that you expect to be around after 35 years, will have decent succession planning. So you need to look at measure players. You need it to be well diversified. I have two recommendations for you. These are fairly new funds, launched after careful consideration I would think. You can expect the fund company having a lot invested in their success and them not being passing fads
Vanguard Global Minimum Volatility - VMVFX
TRP Global Allocation - RPGAX.
I own both of them, and I don't want to live on this planet for 35 years, but I'm unlucky these are what I would likely leave my grandchildren...if they are well behaved.