Investing March 10, 2003

Gold, Bank Stock Funds Flourish in Tech Tumble

March 10, 2003 (PLANSPONSOR.com) - Most equity funds may continue to get pounded these days, but those funds investing in gold and financial services have posted the heftiest returns since the crest of the Nasdaq Composite Index three years ago

Reported by

Fred Schneyer

According to data from fund tracker Lipper Inc., of the 40 stock funds with the best annualized return since the Nasdaq peak, 12 are gold funds, eight are financial-services funds, and seven use short-selling or a strategy that tries to produce results inverse to the Nasdaq’s returns, Dow Jones reported.

Tech funds, once the darling of so many, now make up the majority of bottom dwellers. Among the worst post-peak performers, 25 out of 40 are classified as tech funds by Lipper, while most of the others clearly had a bias toward tech stocks.

Under “Achievers”

Leading the pack of underachievers is the ProFund UltraOTC, which “seeks daily investment results that correspond, before fees and expenses, to 200% of the performance of the Nasdaq 100 Index,” according to the ProFunds Web site. The fund has an annualized return of negative 74.4% since the Nasdaq crumbled, and its assets have fallen about 90%, from $1.5 billion to $158.4 million at the end of January.

On the opposite end, Schroder Ultra Fund has provided the best return since March 2000, with 47% annualized return and a cumulative return of 217%. However, Ira Unschuld, the fund’s star manager, left the firm to start his own hedge fund at the end of last year, and the fund remains closed to new investors. The numbr two fund is Burnham Financial Services, which boasts an annualized return of 40% over the last three years, a period during which its assets have climbed to more than $80 million from about $3 million.

“Close” Quarters

Among the worst-performers, several have recently indicated they will be closing, while a number of others continue to stubbornly hang on. Van Wagoner Funds, which has four funds among the 40 worst performers, said it plans to liquidate three of those portfolios. Ivy Global Science & Technology, with a three-year annualized return of negative 54%, will be folding its assets into a similar Waddell & Reed fund. AIM Funds said it plans to fold its New Technology fund, launched in August 2000, into its Global Science & Technology fund.

AIM Global Science & Tech is down more than 51% since the Nasdaq began its fall , and its assets have slipped to about $263 million at the end of January from nearly $2 billion in March 2000.