Diversified Funds Squeeze Out Q1 Gain

March 31, 2004 (PLANSPONSOR.com) - U.S. diversified stock funds were up a slight 0.80% in the first three months of 2004, significantly below the 30% rise noted in all of 2003.

Across the equity gamut, the best performances were turned in by funds that invest entirely in specific sectors like real estate (10.39%), telecommunications (4.96%) and financial services (3.58%), which saw average returns of almost 3%.   Also higher were world equity funds, lead by increases in Japanese funds (10.66%), international small cap funds (6.14%) and emerging market funds (5.51%),   rising an average of 2.62%, according to preliminary first quarter data from Lipper reported by Reuters.

Overall, it was the small and mid cap funds turning in stronger performances for the first quarter of 2004.   Small cap core funds returned 2.74%, mid cap core funds were up 1.83% and returns from large cap core funds were in negative territory at -0.48%.

Compared to last year’s run up “it’s quite a slow down,” Andrew Clark, senior research analyst at Lipper told Reuters. “In January and February, it was pretty much sideways movement … then the February employment numbers came out on March 5 and they were not very rosy.”

Clark said low interest rates continued to help real estate and financial services funds and that Japanese funds had been boosted by a pick-up in consumer demand in that country.