What Top Mutual Fund Managers Are Telling Us
In the past, one of the best ways to ensure financial success following an economic recession was to invest in small cap stocks or mutual funds.
The problem this time around is that small cap companies face considerable roadblocks to their growth as they are unable to obtain credit either at affordable rates or at all.
Without credit and without affordable credit, companies often cannot pursue their growth objectives, particularly at times like these when there are plenty of "cheap" opportunities out there.
Some of mutual funds can actually defy gravity, however, when it comes to this small niche of opportunity (however, these funds are not easily found).
In evaluating these funds, there have been some indicators as to what some of the highly paid fund managers see as areas of opportunity in the coming years.
We will look at two of these opportunity areas.
1.
Energy.
This sector is one that should not expect to see failure anytime in the near future.
After all, whether consumers are looking for gasoline or alternative energy for their vehicles or whether governments are seeking nuclear power or wind turbines to power cities, the Energy sector will not go away.
There will always be a demand for energy products and the companies that are best positioned to take advantage of these existing and emerging technologies are often wealthy or heavily backed.
This means that the chance of failure is significantly reduced and the successful small cap mutual fund managers realize this: small cap companies will either evolve into big-time energy powerhouses or they will be gobbled up for their leading edge technologies by larger conglomerates.
2.
Financial Services.
This seems almost counter-intuitive but if you look at the most successful small cap investors, you will find a heavy weighting in financial services.
This could be a contrarian approach or one of astute intuition.
Regardless, financial services companies that survived the recent credit crunch may stand to benefit from the recovery.
Unlike their mega- or large-cap counterparts, small cap financial services companies are less regulated by the governments.
Not only have they not been provided with big hand-outs, but they are less involved in the risky business dealings that nearly destroyed (and most certainly neutered) the larger financial services companies.
Once people get back to work, these companies will be better able to accommodate the lending needs of the everyday borrower.
Clearly, there are opportunities in the small cap arena.
What makes this field difficult for the individual investor to navigate is what specific security, or dozen securities they should include in their portfolio.
Perhaps an easier option is invest in a highly ranked mutual fund that specializes in this field.
The problem this time around is that small cap companies face considerable roadblocks to their growth as they are unable to obtain credit either at affordable rates or at all.
Without credit and without affordable credit, companies often cannot pursue their growth objectives, particularly at times like these when there are plenty of "cheap" opportunities out there.
Some of mutual funds can actually defy gravity, however, when it comes to this small niche of opportunity (however, these funds are not easily found).
In evaluating these funds, there have been some indicators as to what some of the highly paid fund managers see as areas of opportunity in the coming years.
We will look at two of these opportunity areas.
1.
Energy.
This sector is one that should not expect to see failure anytime in the near future.
After all, whether consumers are looking for gasoline or alternative energy for their vehicles or whether governments are seeking nuclear power or wind turbines to power cities, the Energy sector will not go away.
There will always be a demand for energy products and the companies that are best positioned to take advantage of these existing and emerging technologies are often wealthy or heavily backed.
This means that the chance of failure is significantly reduced and the successful small cap mutual fund managers realize this: small cap companies will either evolve into big-time energy powerhouses or they will be gobbled up for their leading edge technologies by larger conglomerates.
2.
Financial Services.
This seems almost counter-intuitive but if you look at the most successful small cap investors, you will find a heavy weighting in financial services.
This could be a contrarian approach or one of astute intuition.
Regardless, financial services companies that survived the recent credit crunch may stand to benefit from the recovery.
Unlike their mega- or large-cap counterparts, small cap financial services companies are less regulated by the governments.
Not only have they not been provided with big hand-outs, but they are less involved in the risky business dealings that nearly destroyed (and most certainly neutered) the larger financial services companies.
Once people get back to work, these companies will be better able to accommodate the lending needs of the everyday borrower.
Clearly, there are opportunities in the small cap arena.
What makes this field difficult for the individual investor to navigate is what specific security, or dozen securities they should include in their portfolio.
Perhaps an easier option is invest in a highly ranked mutual fund that specializes in this field.
Source...