Fixed Income Funds Close Weak Quarter

April 4, 2002 ( - US bond funds edged up by 0.28% in the first quarter of the year, lagging behind the 0.36% return of stock funds, as investors digested the early signs of an economic rebound reflected in recent data releases.

Fixed income funds, which represent a combined $2.5 trillion, slipped by 0.42% in March on interest rate concerns, trimming gains made in January and February, when funds increased by 0.39% and 0.42% respectively as investors sought refuge from stocks beaten down by the wave of accounting scandals.

According to data from Lipper, Inc, the average fund rose 0.28% over the quarter, after rising by 0.93% in the final quarter of 2001.

Target Maturity, Treasury, Junk Bonds

In March, target maturity funds, which hold longer-dated securities and move in tandem with long-term Treasuries, were the worst performers, receding by 5.01%, after a 1.41% gain in the previous month. Over the quarter, target maturity funds dropped 2.37%.

The pattern was the same among US Treasury and government funds, which fell by 2.01% and 3.13% over the month, after increasing by 1.01% and 0.95% in February.

Meanwhile high yield, or junk bond funds rebounded in March, increasing by 1.97% gain after dipping 1.38% in February. Over the quarter, they were up 0.99%, a meager gain in comparison to the 5.31% increase posted in the previous quarter.

Among fixed income funds, emerging market funds led the pack , ballooning 6.94% over the quarter, after a 8.59% gain in the final quarter of 2001.