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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (27348)	2/28/2005 10:59:25 AM
From: ild	Read Replies (3) \| Respond to of 110194

Bernie Schaeffer A Funds Diversion 2/25/2005 3:51 PM ET Every so often I like to take a step back and look at what's going on in the world of sector mutual funds as yet another tool in my arsenal of sentiment indicators. Mutual fund activity, in particular sector fund trends, is a good way to gauge where investors are placing their bets. And if the Fidelity Select family of sector funds serves as a microcosm of sector bets in general, I'm seeing much of the same trend of late as I've been observing throughout the market. While outperforming sectors, especially on the commodities front, have experienced a healthy chunk of inflows, I believe we are far from peak levels when comparing to the past. Here are some interesting facts regarding cumulative assets for five major categories in the Fidelity Select group: Financial Services Funds (Banking, Brokerage & Investment, Financial Services, Home Finance, Insurance): cumulative assets of $2.2 billion Commodity-Related Funds (Chemicals, Energy, Energy Service, Gold, Industrial Materials, Natural Gas, Natural Resources, Paper & Forest Products): cumulative assets of $2.97 billion. Health Care (Biotech, Health Care, Medical Delivery, Medical Equipment & Systems, Pharmaceuticals): cumulative assets of $5.3 billion. Technology (Computers, Developing Communications, Electronics, Multimedia, Networking & Infrastructure, Software & Computer Services, Technology, Telecom, Wireless): cumulative assets of $5 billion. Transportation (Air Transportation, Automotive, Defense/Aerospace, Transportation): cumulative assets of $663 million. The numbers indicate that funds devoted to the commodity-related sector substantially lag those seen in the health care and technology sectors. This dichotomy is in place in spite of the huge outperformance from commodity-related stocks and the relative weakness from health care and technology. As such, I see plenty of room for rotation out of weaker sectors such as big-cap tech and big-cap pharmaceutical funds and into commodity-related sectors, such as energy, chemicals, and paper and forest.