Investing July 30, 2001

Mutual Fund Returns Struggle in 2001

July 30, 2001 (PLANSPONSOR.com) - The first half of 2001 has been hard on equity mutual fund investors, with only 23% of the asset class reporting positive results, according to rating and analysis provider Weiss Ratings, Inc.
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First quarter rate cuts by the Federal Reserve failed to buoy the markets early in the year and equity mutual funds slipped by 12% over the three-month period. However, April’s rally helped to cancel out some of those losses, the funds gaining 6.3% in the second quarter of 2001.

Overall, the 6,919 equity mutual funds studied by Wiess Ratings fell by 6.9% on average in the first half of the year.

Tech, Growth, Foreign

Not surprisingly the worst returns came from the technology sector. Of 200 technology funds, only 4% managed positive returns, leading to an average 24.6% decline across funds in this sector.

Aggressive growth funds also performed poorly, returning minus 13.5% on average. Of the 224 funds in this sector, only 30, or 13% reported positive returns.

Performance by foreign sector funds was also dismal, the funds falling by 12.6% on average following increased concerns on debt levels in Argentina, the liquidity crisis in Turkey and continuing political upheaval in Indonesia and the Philippines.

Some Numbers are Up

Nevertheless, a handful of funds within these sectors did manage stellar returns, over the period. CMG Focus Fund, an aggressive growth fund, for instance, increased by 26%.

Of the equity funds studied by Weiss Ratings, the top performers over the first half of 2001 were:

  • Pilgrims Precious Metals A, which increased by 55.2%
  • Matthews China Funds, a foreign fund which was up by 43.1%, and
  • Boston Ptrs Small Cap Value II, up by 40.2%

Bond funds didn?t do all that much better. The average return for bond mutual funds dropped to 0.23% in the second quarter, down from 2.21% over the previous quarter. Overall, bond mutual funds returned 2.33% for the six-month period.

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