It takes considerable time for countries to rebound from major financial crises. Thus, excessively high unemployment will continue to hamper a speedy resolution of our economic problems. Corporations are not hiring because of new federal programs and regulations. Furthermore, the dangers of overspending have not been adequately addressed at the federal level. This is sowing the seeds of inflation.
As we previously projected, the U.S. has bounced along at low levels of economic activity, with feeble GDP increases. The business community has received little encouragement from Washington. Still, Americans are resourceful and we see a country that is stabilizing and slowly improving. Except for the situation in Europe, we would be very hopeful about the future. About 20% of our exports go to Europe and many U.S. firms have a major presence there. Bond investors forced many European yields to unsustainable levels as high debt levels and confidence in repayment lagged. A recession in Europe will also threaten the U. S. economy.
The Federal Reserve's policies are accommodative
Political uncertainty in Washington
Interest rates are low
New government programs and overspending are unpopular among voters
Exports thrive for now
Problems in Europe and a stronger dollar will slow exports
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The Blended Index is comprised of a 25% weighting in the S&P 500 Index, a 25% weighting in the Russell 2000 Index (a widely recognized index of market activity based on the aggregate performance of U.S. domiciled, publicly traded common stocks, which as of September 30, 2006, had an average market capitalization of approximately $1.10 billion, a median market capitalization of approximately $606 million and the largest company in the index had an approximate market capitalization of $2.495 billion) and a 50% weighting in the Barclays Intermediate Government/Credit Bond Index (an unmanaged index generally representative of intermediate term bonds).
The S&P 400 Value is a recognized, unmanaged index of mid cap stocks considered to be Value stocks using Standard and Poor's methodology.
The Russell 2000 Index is a widely recognized, unmanaged index comprised of the 2,000 smallest U.S. domiciled publicly-traded common stocks of the Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index, an unmanaged index of the 3,000 largest U.S. domiciled publicly-traded common stocks by market capitalization.
An investment in an exchange-traded fund (ETF) generally presents the same primary risks as an investment in a conventional fund (i.e., one that is not exchange traded) that has the same investment objectives, strategies, and policies. The price of an ETF can fluctuate up or down, and the Fund could lose money investing in an ETF if the prices of the securities owned by the ETF go down. In addition, ETFs may be subject to the following risks that do not apply to conventional funds: (i) the market price of an ETF's shares may trade above or below their net asset value; (ii) an active trading market for an ETF's shares may not develop or be maintained; or (iii) trading of an ETF's shares may be halted if the listing exchange's officials deem such action appropriate, the shares are delisted from the exchange, or the activation of market-wide "circuit breakers" (which are tied to large decreases in stock prices) halts stock trading generally.
Funds whose investments are concentrated in a specific industry or sector may be subject to a higher degree of market risk than funds whose investments are diversified. In addition, the Fund may be subject to specific risks of the technology sector, such as obsolescence.
The 90-Day Treasury Bill Index is an unmanaged index generally representative of the average yield of 90-day Treasury bills.
You should carefully consider the investment objectives, potential risks, management fees, and charges and expenses of the Fund before investing. The Fund's prospectus contains this and other information about the Fund, and should be read carefully before investing. You may obtain a current copy of the Fund's prospectus by calling 1-800-995-2637 or click here to view or download a prospectus online.
Mid, Small and Micro Cap investing involve greater risk not associated with investing in more established companies, such as greater price volatility, business risk, less liquidity and increased competitive threat. Fund holdings and sector weightings are subject to change without notice. Past performance is no guarantee of future results.
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