Bright Spots Few, Far Between in Q1 Fund Returns

April 4, 2005 ( - Looks like those first quarter statements aren't going to be much fun for participants - or plan sponsors.

According to data released on Friday by mutual fund watcher Lipper Inc., most mutual fund sectors registered negative returns in the first quarter.   US diversified equity funds posted an average loss of 2.53% for the first quarter, according to the Associated Press.

Growth funds suffered an even larger loss – small-cap growth funds shed 5.4%, while large-cap growth funds fell 4.56% during the quarter.   Growth funds still lean fairly heavily on technology holdings, so it is not surprising that technology funds had a negative return of 9.01%, and telecommunications funds lost 6.98%.  

Better Bets

International investments proved to be a better bet.   International small- and mid-cap value funds enjoyed a 4.04% return, and those focused on the Pacific Rim (excluding Japan) enjoyed returns of 2.18%.   World equity funds on the whole, however, saw negative returns of 0.12% for the quarter.

Interest rate concerns managed to inflict some damage on both real estate and funds invested in the financial sector.

In fact, the only sector funds with positive returns were those that benefited from soaring oil prices in the quarter, including natural resources funds (which include oil companies) with 12.52% returns, while utility funds gained 2.68%.

Bear market funds and those focusing on oil and natural resources were among the top five individual performers in the first quarter.  ProFunds’ Energy fund led all mutual funds with a 25.7% return, followed by Oppenheimer’s Real Asset A total return fund (up 21.92%), Merrill Lynch’s Real Investment C fund (up 19.39%), US Global Investors Global Resources fund enjoyed a 19.22% return, and Rydex Dynamic Funds Venture 100 bear market fund saw returns of 19.05%.

Worst performing funds included:

  • Apex Mid Cap Growth Fund (-27.93%)
  • Ameritor Investment’s small-cap growth fund (-27.27%)
  • ProFunds’ Internet (-25.56%)
  • Reynolds Fund (-22.29%)
  • Amerindo Technology Fund (-21.21%)