Today's Opportunities - April 1, 2008

Most of our selected funds continue to turn in solid relative performance in a down market, and that’s great.  With our current downturn showing a bounce early in Q2, now is a good time to review your portfolio.  This quarter we’re taking five funds off our selected list and recommending selling four of them.

We’d recommend looking at the following sectors for inclusion in portfolios at this time: bear market funds (small positions only), Africa/Middle East (low correlation w/ U.S.), Mortgage & Municipal Bonds.

Changes in Fund Recommendations

Deletions

Kinetics Paradigm (WWNPX) – Great fund, wrong time in our opinion.  While the fund’s bias towards global financial exchanges has added real value over the past few years, it’s likely the sector will come under increasing pressure as the slowdown builds.  We’re moving elsewhere in managed accounts and the Pariveda Wealth Advisor models.

Delafield (DEFIX) – relative out-performance has decelerated.  While the fund may continue to be a worthwhile hold over the coming quarters we’re taking it off our recommended list.

Bridgeway Small Cap Growth - N (BRSGX) – it’s extraordinary growth bias makes it susceptible to further losses in a bear market.  Will be a solid choice when the economy bottoms.

Alpine International Real Estate (EGLRX) – faced with a severe credit crunch, nothing good will come of the global real estate sectors for the next few years in our opinion.  Yields are still too low to make the sectors, at home or abroad, attractive.

Cambiar Conquistador (CAMSX) – the team here has shown they’re not savvy at investing for a down market.  As such, there’s no compelling reason to continue holding, so move on.

Additions

Jordan Opportunity (JORDX) – Concentrated, but management looks adept at searching out opportunities in both up and down markets.  While it’s probably worth the transaction fee needed to enter, plan to hold for the long-term and don’t place more than 10% of your investible assets here.

Janus Mid Cap Value Inv. (JMCVX) – Another timely offering from Janus (this time from the value side of the shop).  This is a solid long-term offering that seems to be positioned well for the downturn.  We like many of the individual stock names that currently make up the portfolio.

Royce Dividend Value Service (RYDVX) – Royce has long been a quality small cap value shop and, while the fund is relatively unknown, the management team isn’t.  We like the prospects for this offering.  Given the 50% weighting in financial service companies and the fund’s ability to hold up quite well so far this year, we think it’s got good prospects for solid capital appreciation as the current storm lifts.

Grizzly Short Fund (GRZZX) – a complement to BEARX, the Grizzly Short fund has been turning in far superior risk-adjusted returns over the past quarter and a half.  While the fund focuses more on the small cap sectors of the market, and performance relative to BEARX may trail off, it’s a good diversifier.  There’s nothing more frustrating for an investor than to get the macro call wrong and stumble on the implementation.  Diversifying among even bear market funds provides this.  Recognize that the market sensitivity of BEARX is roughly -0.80 while GRZZX sports a more volatile -1.10 beta.