Nine out of Ten Stock Mutual Funds End 2002 in the Red

January 28, 2003 ( - An uptick in the fourth quarter was not enough to scare off the bears, as the vast majority of stock mutual funds reported negative returns in 2002.

Ninety percent of the 8,150 stock mutual funds covered by Weiss Ratings, Inc suffered losses in 2002.   The dismal performance of stock funds in 2002 marked the third consecutive year that investors have suffered declines, averaging losses of 19.2%, 12.5%, and 4.5% in 2002, 2001, and 2000, respectively, according to data by Weiss.

Lemon List

Technology funds’ dismal 2002 performance earned this sector the dubious distinction of being the worst performer among stock mutual fund categories for third year in a row, with 99.3% of the funds ending the year in the red, compared to 98.6% in 2001 and 99.4% in 2000. Although the sector improved during the fourth quarter, posting a gain of 16.9%, investors still lost a staggering 40.3% on technology funds last year, adding on to mounting losses of 35.6% in 2001 and 29.0% in 2000.  

Losses this year were heavy for ProFunds, which saw three of its funds lead the dubious list of worst performers in 2002.   The ProFunds Wireless, Semiconductor and Ultra OTC funds lost a breathtaking 80.5%, 70.4% and 69.7%, respectively in 2002.   Turning in the year’s fourth and fifth worst performances were Rydex Dynamic Velocity 100, down 68.5%, and Van Wagoner Post Venture Fund dropping 67.3%.

Taking the “Gold”

Precious metals and real estate-related funds were the only sectors to dance with the bulls in 2002. Funds investing in precious metals earned a sparkling 59.7% average return for the year, while real estate-related funds hammered out gains of 3.5%.

Investors definitely had the twinkle of gold in their eyes looking at the top performing funds for 2002, as the top five were covered in 14 karat.   Tops on the list was First Eagle’s SoGen Gold Fund that gained a gleaming 107% in 2002.   Also shinning brightly was the Monterey OCM Gold and Van Eck International Investor Gold, returning a dazzling 93.3% and 90.5%, respectively.   Rounding out the gold-dominated list was Gabelli Gold Fund’s radiant 87.2% and Tocqueville Gold Fund’s luminous 82.9% return in 2002.

Investor “Bonding”

In a complete about-face to stock funds, 94.0% of the 4,284 bond mutual funds Weiss tracks delivered positive returns to investors in 2002, averaging a gain of 6.4%. These results represent were also almost identical to 2001 when 95.0% of bond funds posted gains, earning an average return on all bond funds of 4.7%.

American Century dominated the top-performing bond fund list in 2002, with the fund family’s Target Maturity 2025, Target Maturity 2020 and Target Maturity 2015 returning 29%, 28.3% and 27.1% respectively.   The other top performers in this year’s list turned their focus overseas as Delaware’s Pooled International Fixed and Pooled Global Fixed rounded out the top five with returns of 26.7% and 26.2%, respectively.