Best Mutual Funds Report: Bulls In Hibernation In Bear Market

The first list of new buys by the best mutual funds in the new year reflects the lack of a Santa Claus rally in 2022. At least for now, it’s the bulls, rather than the bears, that have gone into hibernation. The dollar amounts invested by top funds into the individual stocks on this screen declined significantly in December.


The latest report shows the largest investments by the best mutual funds were in Merck (MRK) and Mastercard (MA), each taking in roughly $150 million. They were the only two stocks above the $100 million mark.

Compare that to the amounts invested toward the end of 2021.

Back when tech stocks were still in favor, the numbers for November 2021 (reported at the beginning of December) showed top money managers betting billions on once-hot leaders like Apple (AAPL) ($1.8 billion), Nvidia (NVDA) ($1.8 billion) and Alphabet (GOOGL) ($1.3 billion).

When the May 2022 report came out in early June, AAPL, NVDA and GOOGL had all dropped off the list.

Checking the new buys and sells by the best mutual funds each month helps investors stay on track of any such signs of rotations into or out of certain sectors.

Where The Best Mutual Funds Are Investing Now

While tech stocks continue to struggle, money managers focus largely on medical and energy stocks, continuing the trend seen throughout 2022.

Sixteen oil stocks made the list, including Exxon Mobil (XOM), Phillips 66 (PSX), Northern Oil & Gas (NOG) and Hess (HES).

Fifteen names from the medical sector also made this stock screen. In addition to Merck, Eli Lilly (LLY), Catalyst Pharmaceuticals (CPRX), BioMarin (BMRN) and DexCom (DXCM) all earned that distinction.

The best-performing institutional investors also showed noticeable demand in the machinery sector, with 13 stocks making the list. Heavy equipment giants Deere (DE) and Caterpillar (CAT) revved their engines to earn a spot. Names like Illinois Tool Works (ITW), Trane Technologies (TT) and Mettler Toledo (MTD) also made the cut.

Top funds also went shopping for retail stocks like Wingstop (WING), Tractor Supply (TSCO), Academy Sports & Outdoors (ASO) and Ulta Beauty (ULTA). In total, the best mutual funds put 12 retailers from this broad sector in their shopping carts.

Buying Or Just Browsing In Embattled Bear Market?

Bear markets and market corrections call for caution. While some stocks will form chart patterns and flash breakouts in such environments, failed breakouts are common.

With a new year just getting underway, market direction and investor sentiment can change quickly — and unexpectedly.

For now, investors should focus building and maintaining their watchlists rather than expand their portfolios. Focus on stocks with market-leading relative strength lines finding support at key moving averages like the 50-day and 10-week lines.

And keep track of what the best mutual funds are buying throughout the year. Start by reviewing this month’s full list of new buys and check this link each month for the latest updates.

Follow Matthew Galgani on Twitter at @IBD_MGalgani.


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