How Do You Diversify?
Al Korelin, host of The Korelin Economics Report, talks with Frank Holmes recently about the concept of diversification and its importance during such volatile times in the market. Frank agrees that with the commodity space and natural resource stocks getting beaten up, this should be a reminder to investors not to have all their eggs in one basket – hence, portfolio diversity.
Frank makes a case for short-term municipal bonds as a way to diversify, specifically noting his Near-Term Tax Free Fund (NEARX), and also says that when it comes to gold, a 10-percent weighting in your portfolio is his recommendation – rebalancing annually of course.
Listen to Segment 3 of the show to hear what else falls under the realm of diversification according to Frank.
To learn more about the Near-Term Tax Free Fund straight from portfolio manager John Derrick, watch this introductory video.
Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Distributed by U.S. Global Brokerage, Inc.
Morningstar ratings based on risk-adjusted return and number of funds
Category: Municipal National Short-term funds
Bond funds are subject to interest-rate risk; their value declines as interest rates rise. Though the Near-Term Tax Free fund seeks minimal fluctuation in share price, it is subject to the risk that a decline in the credit quality of one or more portfolio holdings could cause the fund’s share price to decline. The fund also is subject to interest-rate risk; its value declines as interest rates rise. Tax-exempt income is federal income tax free. A portion of this income may be subject to state and local income taxes, and if applicable, may subject certain investors to the Alternative Minimum Tax as well. The Near-Term Tax Free Fund may invest up to 20% of its assets in securities that pay taxable interest. Income or fund distributions attributable to capital gains are usually subject to both state and federal income taxes. The Near-Term Tax Free Fund may be exposed to risks related to a concentration of investments in a particular state or geographic area. These investments present risks resulting from changes in economic conditions of the region or issuer.
Unlike bank savings accounts, an investment in a bond fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Stock markets can be volatile and share prices can fluctuate in response to sector-related and other risks as described in the fund prospectus. Stock markets can be volatile and can fluctuate in response to sector-related or foreign-market developments. For details about these and other risks the Holmes Macro Trends Fund may face, please refer to the fund’s prospectus.
The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies.
The Purchasing Manager’s Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment. The J.P. Morgan Global Purchasing Manager’s Index is an indicator of the economic health of the global manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.
Morningstar Ratings are based on risk-adjusted return. The Morningstar Rating for a fund is derived from a weighted-average of the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating metrics. Past performance does not guarantee future results. For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.)
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Diversification does not protect an investor from market risks and does not assure a profit.