390 / 772
4
Former
PIMCO
manager Mohamed El-Erian says
the Fed will wait until December before hiking rates:
“The Fed doesn’t want to add to market instability
at this time. Lower interest rates and lower oil prices
will boost the U.S. economy. This will postpone a
September rate hike, but it won’t lead to another
round of quantitative easing as some have predicted.
“I would look at emerging-markets currencies and
bonds today.”
Highlights From U.S. Fund Performance
Selling has hit natural-resources stocks the hardest
while health-care stocks have remained in the black.
That’s meant that value funds have generally suffered
bigger losses than growth funds. Included among
the hard-hit value funds are those that have generally
held up well in down markets such as
Longleaf
Partners
LLPFX
and
AMG Yacktman Focused
YAFFX
.
Energy names led Longleaf to a
10%
loss in August
and a
16%
loss for the year to date.
AMG
Yacktman
Focused lost
6%
for the month—not far from the
market as a whole—but it was in the red to start the
month and so was off
11%
for the year to date
owing to media bets like
Twenty-First Century Fox
FOX
and
Viacom
VIAB
.
Sequoia
SEQUX
shed
5%
but is still up
11%
on
the year thanks to health-care names like
Valeant
Pharmaceuticals International
VRX
.
Some foreign funds have been particularly impressive
given the sell-off across foreign markets.
Thornburg
International Value
TGVAX
shed
7%
in August
but is still up
7%
for the year thanks to big winners in
Japan such as
NT&T
and
Sony
.
Fidelity Overseas
FOSFX
manager Vincent Montemaggiore is up
9%
for
the year to date at his fund, which has a Morningstar
Analyst Rating of Bronze, thanks to European pharma-
ceuticals and banks.
A couple of well-regarded cautious foreign funds
showed they still know how to play defense.
IVA
Worldwide
IVWAX
lost just
2%
in August and
First
Eagle Overseas
SGOVX
shed just
3%
.
The four market-neutral funds in the Morningstar
500
all lost money in August. That’s a little disappointing,
though
Arbitrage
ARBFX
at least only lost
0
.
6%
. So, if
you owned them hoping to lose less in a downturn,
you’re probably happy, but if you wanted to actually
make a positive return, you may be disappointed.
Patience Is Always a Good Strategy
In an earlier bear market, I asked John Bogle what his
advice would be, and he said: “Don’t just do some-
thing, sit there!” That’s about the best strategy for
most of us. Sticking to your plan is what matters most.
However, if you were to go shopping, I’d suggest you
start in the emerging-markets aisle.
K
Making Sense of the Market Tumble
Continued From Page 3