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TradeTheNews.com Barron’s Summary: Cover story on mutual fund performance in 2009; cautious on firms who fail to offer dividend payment

Barron's Summary: Cover story on mutual fund performance in 2009; cautious on firms who fail to offer dividend payment
Barron's recap of Mutual Fund performance in 2009: Best performers included Putnam, T. Rowe Price, Aberdeen, FAF and Nuveen. Expectations for 2010 are much more mixed; article notes that most funds are still representing declines across a broader two-year average. Return of capital from individual investors is seen rising in 2010, with interest in US focused funds rising y/y. Fund allocation and top calls by portfolio managers: MS looking to sectors with simple business models, mentions Master Card [MA], Morningstar [MORN], and Versik [VRSK]. Franklin Templeton moving towards a more normalized book with positive mention in Exxon [XOM], Southern Co [SO], Target [TGT] and PepsiCo [PEP].

Barron's looks at Hedge Funds industry in 2010, sees more selective approach. Return levels will not be as easy as those seen in 2009. Sector managers are seen as interested in distressed debt, emerging markets and L/S credit. Article states that growth and news flow out of China remains a macro concern. Article includes positive fund mention on CVS [CVS] and Wal-Mart [WMT].

Barron's' critical on corporate dividend payouts/yields at Apple [AAPL], Google [GOOG], Cisco [CSCO], Amgen [AMGN], eBay [EBAY], Dell [DELL] and DirectTV [DTV]. States that current low payout rates and activities to hoard corporate cash are only a disservice to shareholders. 15 of the top 100 S&P 500 companies have no dividend payment. States those firms should follow the lead set by Microsoft [MSFT] in 2003 and pay regular and special dividends. Article critical of institutional investors for not placing enough pressure on firms to offer, or raise payments. Believes that dividend payments more attractive than buy backs, as buy backs at high levels cost the firm more and provide little benefit to the shareholder. Barron's disputes the expectation that growth sector firms should not pay dividends (rather than reinvesting capital), states that strong firms can demonstrate their solid base by both making dividends, and reinvesting for future growth.

Barron's compares brokers stock picking abilities; top pickers include Goldman, McAdams Wright and Morgan Keegan due to emphasis on tech, financials and small cap names. Worst performers included Wedbush Morgan and Raymond James. Goldman themes in 2010 include cash rich companies and healthcare, positive mention in Merck [MRK] and Pfizer [PFE].

Barron's critical on government missing real focus priority: federal debt. States that Wednesday's State of the Union failed to adequately address rising deficit levels and the methods through which Congress will fund the national debt. Proposed spending freeze will only have effect on approx 35% of the budget, ignoring growth section that includes: Medicare, defense and entitlements. Barron's fears that current levels of stimulus spending will gradually become the norm, with higher levels of government spending becoming long-term budget expectations, rather than one-off programs.

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