Mutual Funds

Predicting the best and worst stock mutual fund sectors in the first half of this year looked too easy, in hindsight: You just needed to flip last year's best and worst. Healthcare stocks, last year's weakest domestic industry sector, charged to the top of the charts in the second quarter and first half of this year. Funds focused on health and biotech issues rose 14.8% in the half, on average, after lagging behind the rest of the market with an 8.2% average gain in 2010, according to Lipper Inc. At the bottom of the performance lists for the quarter and half were precious metals funds, which typically own shares of gold and silver mining firms.

Question: What are the prospects for my stock in Charles Schwab Corp.? Answer: You don't need to "Ask Chuck" to know that the deep economic downturn and bear market in stocks weren't kind to brokerage firms. Fees dropped as asset values plunged and investors fled any kind of risk. Because the Federal Reserve dropped short-term interest rates to near zero, Schwab, like other firms that manage mutual funds, has had to waive fees on its money market funds to avoid losses for investors.

Question: What's your opinion of United Technologies Corp.? Answer: As with any conglomerate, an investor must do some homework to fully understand United Technologies' diversified array of businesses. The company has a number of well-known brands, including Carrier air conditioners, which are experiencing strong worldwide sales. Its Otis elevator unit — as well as Carrier — should benefit from a high level of construction in China. The firm's Pratt & Whitney jet engine business is a solid performer boasting new models with improved fuel economy and reduced noise, and its Sikorsky unit is a major manufacturer of helicopters.

The bleeding finally has stopped: Municipal bond mutual funds took in a net $38 million in new cash from investors last week, the first inflow since November, new data show. The turnaround for the muni fund industry follows six straight weeks of rising bond values and falling interest rates, as the $2.9-trillion tax-free muni market has rebounded after a wave of selling late last year and early this year. The return to cash inflows suggests that many investors are buying only because the market is rallying; they passed up the chance to buy at higher yields earlier this year because the risks seemed too great at the time.

Who: David Moehlman Annual income: $113,000 Assets: $1.7-million net worth: $491,000 in five condominiums, $690,000 in mutual funds and savings accounts, and $542,000 in mutual fund retirement accounts Debts: None Recommendations: Diversify $1.2 million invested 100% in mutual funds exclusively holding U.S. stocks: Put 50% into funds holding U.S. stocks, 13% into funds holding international stocks and 30% into...

Mutual fund giant Pacific Investment Management Co. is planning to build new digs in Newport Beach. The proposed complex, designed by architect Henry Cobb, will include a conference center and a state-of-the-art trading floor, according to developer Irvine Co., which will oversee the project. The development will be about twice the size of Pimco's current 192,000-square-foot home, which is also in Newport Beach, the developer said. Pimco is headquartered at Pacific Financial Plaza in two contiguous buildings.

The judge presiding over a bitter legal battle between Los Angeles money managers TCW Group Inc. and DoubleLine Capital has thrown out TCW's attempt to effectively shut down DoubleLine's mutual funds pending a trial. L.A. County Superior Court Judge Carl West late Thursday denied TCW's request that the court create a trust that could lay claim to gains generated by the DoubleLine funds. "Such a remedy is not available" to TCW under federal law, the judge said in his ruling.

A popular financial maxim warns against investing in things you don't understand. But one of the mutual fund industry's fastest-growing investment options is also poorly understood by investors. That option ? exchange-traded funds ? caught fire in 2010. Thanks to a flood of new money from investors, plus rising stock prices, the value of assets in ETFs surged 43% last year, topping $1 trillion for the first time, according to research firm Morningstar Inc. By comparison, assets in traditional mutual funds rose only 13% in 2010.

Investors who thought they couldn't lose money in bond mutual funds got a wake-up call last quarter. Rising longer-term interest rates meant lower market values for existing fixed-income securities, triggering widespread declines in bond fund share prices. That produced the first notable losses for many bond investments since the fourth quarter of 2008, when most financial markets were in meltdown mode. But the losses last quarter were heaviest in funds that owned the longest-term bonds and tax-free municipal issues.

Like many small investors, Rodney Punt was wary of the stock market for much of the last two years. But the 64-year-old Santa Monica resident recently decided to shift more of his nest egg into equities while reducing what he held in bonds. "The U.S. is coming out of panic mode," he said. "We have an economy that is beginning to pick up. " As 2011 begins, millions of individual investors may be facing the same basic question about their portfolios: Is it time to change the mix? The market crash of 2008 cast a long shadow, encouraging many Americans to play it very conservative with their money in 2009 and 2010.