Mid-Caps Lead Funds Higher in May

Mid-cap funds led the charge in May returning an average of 1.76%, followed by large-cap funds, up 1.23%, while small-caps trailed them slightly at 1.11%.   By comparison, the S&P 500 returned 1.37% for the month, according to data aggregated by Standard & Poor’s.

Among fund investment styles, the strongest return in May was in mid-cap growth funds (2.12%), followed by large-cap growth (1.85%), small-cap growth (1.83%) and mid-cap blend (1.78%).

Overall, May’s return was the highest since January of this year when equity funds put forward a 2.3% return.   Sam Stovall, chief investment strategist at Standard & Poor’s said this is in line with a Presidential election year, when the first quarter is traditionally weak, followed by a rebound in the second quarter as investors determine which candidates will be selected.

“In the third quarter of presidential election years, the market tends to generally outperform third quarters over the long term, 1.6% versus 0.1%,” said Stovall.  “Investors tend to anticipate further gains in third quarters of presidential election years.”