January 17, 2007

what to buy, what i bought

In my Roth IRA, I recently sold off my positions in the Mainstay Small Cap Opportunity Growth fund (motbx). The fund was a mediocre performer for me in the nearly three years I held it. In fact, when the small cap sector was doing lights out, I had only about a 6% annualized return. In other words, combine that with the high expense ratios and the fund stunk.

With the proceeds from the sale, I invested in three things -- two ETFs and one mutual fund. For the ETFs, I chose the iShares MSCI Ex-Japan fund (EPP) as well as Barclays' Asia 50 (ADRA). Clearly, I have faith in the growing markets in Asia, but the faith only goes so far as the total amount between the two ETFs were split between the "new hotness" of EPP and the old stalwarts of ADRA. I also think the financial services sector is going to do lights out in the upcoming years, so I bought into Fidelity's Select Brokerage and Investment Management fund (FSLBX). However, part of my reason to buy into the fund was also the ability to do dollar-cost averaging for my 2007 contributions, which I can't do with my ETFs, nor my other Roth IRA holding, Baidu (BIDU).

You might've noticed a trend in my Roth IRA. It leans very international. And very Asian at that. Normally, it'd probably be overweight in that regards, but I’m planning to max out my 401k this year as well, and in that account, I’m invested in the Vanguard Institutional Index fund (VIIIX), which tracks the S&P 500. That gives me a good core to play off of I think. (Plus, I don't think it hurts that it has a sick 0.03% expense ratio -- you can't beat that!)

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