April Cruelest Month for Stock Funds

May 2, 2002 (PLANSPONSOR.com) - April disappointed investors, despite promises of a rebound made by a slew of positive economic data, as the average diversified US stock mutual fund dipped by 3.7% on average, bringing year-to-date totals into negative territory.

Investors, still jittery from the accounting scandals spawned by Enron, remained skeptical over the outlook for corporate profits and reduced their equity bets.

After a flat first quarter, April’s performance brought the return of the average US stock fund down by 3.3% for the first four months of the year, according to data from Lipper, Inc.

In comparison, in April:

  • the Dow Jones Industrial Average dropped 4.4%
  • the Nasdaq composite index plummeted 8.5%
  • the Standard & Poor’s 500 index lost 6.1%.

Nevertheless, despite the unfriendly market conditions, small-cap value and gold funds managed to provide some bright spots, rising 2.2% and 6.4% respectively.

Still, the funds in the volatile technology and telecom sectors are still taking a beating.

According to Lipper, the month’s worst performers were science and technology funds, down 12.2%, while on a year-to-date basis telecom funds, having lost 28.1%, bring up the rear.

Undeterred by the torpid performance, investors are slowly returning to equities, placing a $29.3 billion net into stock funds in March – the sixth consecutive month in which funds saw positive flows.

Though data are not yet available, Lipper notes that investors are believed to have added to funds in April, but at a much slower pace than the previous month.