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3 Mutual Funds for the Second Half of 2013

Here are three hints: income, income and income

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QuarterlyReviewOutlook185Investors are frantically repositioning their portfolios in light of the recent market response to Ben Bernanke’s pointed comments regarding the future of quantitative easing. There has been no place to hide, as fixed-income and equity investors have equally shared in the pain of downward price movement.

Although it might be the last thing on many investors’ minds, the year is half-over. That means it’s time to take a look at the scoreboard, then game-plan for the second half.

Naturally, the hardest-hit sectors are those that have the highest sensitivity to changes in interest rates. Preferred stocks, REITS and many fixed-income sectors are ripe with opportunity from weak-handed investors getting shook loose. Price dislocations are beginning to present themselves, and if you have cash on the sidelines, there are some great funds you should consider picking up.

When performing due diligence on a mutual fund, I will always compare the fund’s portfolio strategy and performance to a commensurate ETF. It would make little sense to pay higher fees, forgo daily liquidity and transparency by owning a subpar fund. I prefer alpha-creating management teams that operate an active or alternative strategy; one that can’t be replicated within the confines of an exchange-traded product.

Three funds I find appealing during this correction for clients of our strategic income portfolio include:

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