Old-school tactic could lure investors

SEP 09, 2012
David Hollond has turned to a standby investment strategy to play the housing recovery, and he thinks that financial advisers could use the approach to get clients back into equities. Mr. Hollond, co-portfolio manager of the $1 billion American Century All-Cap Growth Fund (ACAQX), has started buying small housing positions and will buy more if the monthly data stay positive. His strategy — dollar cost averaging — is one advisers could use with clients wary of equities, he said. With regular investments over a long period, the overall cost per share of an investment is lowered, because shares are bought when they are up as well as down. Starting with a small amount would let investors ease back into stocks without adding a lot of risk all at once, Mr. Hollond said. “Housing is rebounding, but the sustainability isn't clear,” he said. “Housing companies are saying a lot of positive things, but there's still a lot of uncertainty.”

NUMBERS ARE UP

All 20 cities in the S&P/Case-Shiller Home Price Index had monthly gains in June, for the second straight month, according to Standard & Poor's. Building permits showed similar improvement in June, with a 6.8% year-over-year increase, according to the Commerce Department. It is important to stay invested because — despite all the knotted stomachs that China, Europe and the fiscal cliff are causing — the market is doing pretty well, Mr. Hollond said. The S&P 500 was up about 13% through August, but investors had pulled a net $23 billion from U.S. stocks through mutual funds and exchange-traded funds through July, according to Morningstar Inc. Mr. Hollond contended that much of the cliff-hanging around U.S. stocks will be resolved with the election in November. “No matter who wins, you've got a sense of certainty for the next four years,” he said. [email protected] Twitter: @jasonkephart

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