Forbes.com has an article by Andrea D. Murphy showing preliminary results for mutual funds in various categories. While the stock market is still down significantly from the 2007 highs, many funds showed good returns during the third quarter off the bottom. Some of the funds listed in the results tables in the article have high fees, something that I think can be avoided, but articles such as these provide good indications of what market sectors are leading the overall market. The article goes on to state:

“After taking a terrific pounding last year and suffering additional losses in the first quarter of this year, mutual fund investors are on track to recover a bit--just a bit--of their lost paper profits in the second quarter of this year. Through June 25, domestic diversified equity funds show a year-to-date return of 6%. Sector funds, as a group, and world equity funds rose 7% and 12%, respectively. These results come courtesy of Lipper, a New York division of Thomson Reuters.”   

Matthews India Fund, symbol MINDX, had an astounding 65.1% preliminary return in the second quarter, followed by Rydex S&P SmallCap 600 Pure Value ETF with a 70% preliminary return. Funds that sold stocks short were, obviously, among the biggest losers. It is a welcomed pleasure to be writing about positive returns for the stock market again, even if it is for only a quarter! 

Today I ran across an interesting article from Smart Money online about emerging market funds. Emerging markets are outside of the U.S. and generally refer to the less developed or newly developed countries. Emerging markets are more volatile than other investments, therefore, it is especially important to avoid getting into such investments at market tops.     

It is always fun to be the bearer of good news. Over the past few weeks, I have heard rumblings of the real estate market finally starting to pick up in some areas of the country.  While visiting an Austin Home Depot over the weekend, someone had posted a sign in the entry that read “Real Estate Investor Seeks Apprentice”. Now that is what I call a good sign, pardon the pun. Anything with the words “Real Estate Investor” has been extinct around here for some time. Grated, Austin is one of the stronger markets in the country, but I have witnessed, and continue to witness friends and neighbors struggling to sell their homes over the past year.

Last week Investor’s Business Daily had a chart showing that the Birmingham, Alabama market had appreciated the most in the prior four months through May 25, by 8.9%, followed by Cleveland, Denver, Memphis, and Rochester. Unfortunately, it went on to state that home values have returned to 2001 levels in the country, but that a new index shows price declines slowing. Homes prices in the South have been the strongest over the past few months.  

Today I decided to do some research to find a good high yield bond fund. One of the first things I do when considering an investment is to look at a long term chart. While bond fund prices have had a strong bounce off the bottom over the past few months, a chart reveals that they are still significantly off the highs they reached several years ago. Many yield in the 8 to 11% range, which is enticing enough for me to wait out any return to the previous lows reached in December, which could certainly happen in this floundering economy.

I have been considering high yield bonds since December, but I was uncertain the effect that GM’s pending bankruptcy would have on them if it came to fruition. Then last week I found out that the effect would be nothing. This led me to believe that this market is pretty strong.

One of my favorite high yield bond funds is the Vanguard Corporate High Yield Fund, symbol VWEHX. I like it because it tends to have slightly better quality bonds than many of the high yield bond funds. It also has very low expenses. I have invested in it several times over the years, so it tends to be somewhat comfortable.

Keep in mind that there is a reason for the high yield, and that reason is risk. The bonds that are held in high yield bond funds are of low quality and have a higher chance of default than a regular bond fund that is not designated as high yield. These funds are also referred to as junk bond funds, and for a good reason.

Now are you wondering why I would even consider a junk bond fund? The upside is that being in a fund provides a lot of diversification since you own a group of many, many bonds, not just a few. If a company in the fund should default, the downside would be much less dramatic than if you owned only a few. Additionally, prices are still in the low end of the long term range. This, in addition to the high yield, makes me think that I could earn some good income while I wait it out. Finally, investments that provide the potential for both income and capital appreciation are always appealing to me.      

This beautiful Texas morning I was enjoying one of my favorite reads, Investor’s Business Daily, while sitting by the pool. One of the articles caught my attention, “Discuss Finances Before Saying I Do” by Paul Katzeff. This is not an issue now for me personally, having been married for over 22 years, but the article made several very good points that women need to consider before marriage. Unfortunately, many times the subject of money is forgotten in the excitement of premarital discussions.

First, simply discuss money before committing to marriage. Do you both share the same views about debt? If not, can you reach a common ground? Second, couples should share their complete financials with each other, including all assets, liabilities and income. Third, get credit reports. The reports are free, and they allow each partner to see exactly what they are getting into ahead of time.

Additional premarital discussions should include whether or not assets will be pooled, what will happen if one partner dies or the marriage ends in divorce. Addressing issues such as these can help avoid problems regarding money after the wedding. If either you or a close family member is contemplating marriage, you may want to share these suggestions with them.