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The Zacks Analyst Blog Highlights: PIMCO Foreign Bond (USD-Hedged) D, Domini Social Equity R and Oppenheimer Rochester Fund Municipals Y - Press Releases

For Immediate Release
 
Chicago, IL – March 03, 2015 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Funds recently featured in the blog include the PIMCO Foreign Bond (USD-Hedged) D (PFODX-Free Report), Domini Social Equity R (DSFRX-Free Report) and Oppenheimer Rochester Fund Municipals Y (RMUYX-Free Report).
 
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Monday’s Analyst Blog:   
                       

What Near-Term Rate Hike? 3 Funds to Buy

Investment objectives often involve getting steady returns in the form of dividends. Particularly in times of volatility, regular dividends help to soften the blow of falling stock prices. Moreover, the record-low rate scenario makes dividend paying funds attractive. Mutual funds are a great tool for alternative investment given the characteristics of diversification, liquidity and economies of scale among others.

Dividends are more crucial now, given the low-rate environment that is likely to continue until at least the latter half of this year. Fed Chair Janet Yellen’s semiannual testimony to Congress has put to rest near-term rate hike fears. While laying down factors which would be taken into consideration when making such a decision, Yellen also emphasized that monetary policy would continue to be accommodative. Market watchers now believe that a rate hike would happen only at the end of the year.

Mutual funds paying high dividends assure a consistent stream of income opportunities; and thus are lucrative investment options. Thus, picking mutual funds with decent dividend yields and with relatively high year-to-date return is a prudent move. Before we pick the top-ranked high-yield mutual funds, let’s look into Yellen’s testimony and other details.

“Meeting-by-Meeting Basis”

Yellen said that the Federal Reserve policy statement may soon remove the word “patient” from its policy statement. However, she added that dropping the word "patient" from the Federal Open Market Committee’s (FOMC) statements does not imply that the Fed will the raise interest rate immediately.

Yellen reconfirmed that the Fed will evaluate economic conditions before considering a rate hike. She emphasized that the central bank is looking to retain flexibility to make such a decision “on a meeting-by-meeting basis.” She added: “However, it is important to emphasize that a modification of the forward guidance should not be read as indicating that the committee will necessarily increase the target range in a couple of meetings.”

Employment Improves, Inflation Worrying

Striking an optimistic note about the economic landscape, the Fed Chair was particularly pleased with the employment situation. She said positive changes had taken place on several counts. Long-term unemployment had fallen and a lower number of individuals have to resort to part time jobs.

Meanwhile attrition, which is a valuable gauge of confidence in the job market, is now close to pre-recession levels. However, wage growth remains a concern, though Yellen added that this on its own may not necessarily deter policymakers from pushing up rates.

Inflation remains a cause for concern and “remains well below our longer-run objective,” she said. This factor alone could have led to Yellen’s stance. A strong dollar, global economic weakness and a slump in oil prices have led to both recent wage growth as well as sluggish inflation. Though inflation may not fall lower, there is little to indicate it will come even close to its 2% target.
Rate Hike Possibility Speculations

Fed funds futures now suggest that a rate hike may occur only in the latter half of the year. CME Group data puts the possibility of an increase in September at 53%. On the other hand, the probability of a rate hike in October is 73%. This again goes higher to 83% for December. This is in contrast to a mere 3% possibility in April, 16% in June and 36% in July, data as of Feb 26.

Before the release of the Fed minutes last week, chances of a September increase were around 63%. However, the minutes reemphasized the Fed’s cautious attitude to a rate increase. Currently, it is clear that while the exact timing of a decision remains uncertain, a rate hike will not occur before the second half of the year.

Top Dividend-Paying Mutual Funds

Mutual funds holding income generating securities offer a convenient route to investors looking to hold a well diversified portfolio. Dividend paying mutual funds are one of the best ways to boost portfolio returns. Also, it is often said that companies paying dividends are usually mature firms and have a healthy financial structure.

Here we will suggest 3 mutual funds that either carry a Zacks Mutual Fund Rank #1 (Strong Buy) or Zacks Mutual Fund Rank #2 (Buy).

Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but the likely future success of the fund.

These funds have high 1-year total return. The funds have low expense ratio and carry no sales load. The minimum initial investment for these funds is $5000.

The funds also have high dividend yield. A fund’s dividend yield is the total of its income received from investments and paid to its shareholders over the trailing 12 months, expressed as a percentage of the year-end price of the security. Value Line calculates yield by dividing the total dividends paid each year by the sum of the fund’s offer price.

PIMCO Foreign Bond (USD-Hedged) D (PFODX-Free Report) seeks high total return along with capital preservation and prudent investment management. The fund normally invests in investment grade non-US debt securities, but may invest a maximum of 10% of its assets in junk bonds that carry a rating of B or higher.

PFODX currently carries a Zacks Mutual Fund Rank #1. The fund’s yield is 6.85% and has a 1-year total return of 11.7%. The fund has a low expense ratio of 0.90%, as compared to category average of 1.06%.

Domini Social Equity R (DSFRX-Free Report) seeks to provide long-term total return to investors. The fund invests a lion’s share of its assets in securities of mid to large domestic companies. The fund may also invest in companies traded outside US, or may invest in ADRs. Investments are made after evaluating the social and environmental standards in which the businesses are involved in.

DSFRX currently carries a Zacks Mutual Fund Rank #1. The fund’s yield is 6.23% and has a 1-year total return of 14.9%. The fund has a low expense ratio of 0.9%, as compared to category average of 1.08%.

Oppenheimer Rochester Fund Municipals Y (RMUYX-Free Report) provides a high level of income exempt from federal income tax, state income tax and New York City personal income taxes. The fund mostly invests in New York municipal securities that pay tax-free interest. The fund may also invest a maximum of 25% of its assets in junk bonds.

RMUYX currently carries a Zacks Mutual Fund Rank #2. The fund’s yield is 6.17% and has a 1-year total return of 13.3%. The fund has a low expense ratio of 0.59%, as compared to category average of 0.95%.

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank at www.zacks.com/funds/mutual-funds.
 
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