S&P said small-cap mutual funds returned 5.14% during the first quarter of 2004 and 0.45% in March. Value oriented mutual funds turned in an equally strong performance, returning an average of 4.41% for the first three months and 0.26% in March. By comparison, the average domestic equity fund lost a slight 0.62% in March, while up a respectable 3.02% for the first quarter.
“Smaller-cap stocks may have disproportionately benefited from low interest rates, while value investments may have gained due to defensive market sentiment,” Ken Shea, Managing Director of Global Equity Research at Standard & Poor’s, said in a statement. “History has shown that investors have traditionally moved toward defensive areas in the second year of bull markets.”
Rosanne Pane, Mutual Fund Strategist at Standard & Poor’s, said the flight into value started in the February-March period. “In February/March, investors became cautious about the longevity of the market recovery, consumer confidence started to fall and questions arose over whether or not the growth phase of the recovery was over,” Pane said in a statement. “It was at this point that investors began to run away from growth and rotate into value, consumer staples, and dividend payers.”
According to S&P data, average first quarter/March returns included:
- Small-Cap Value – 5.84%/0.85%
- Small-Cap Blend – 5.62%/0.68%
- Small-Cap Growth – 3.96%/0.16%
- Large-Cap Value – 2.51%/ -1.19%
- Large-Cap Growth – 1.36%/ -1.23%
- Large-Cap Blend – 1.92%/ -1.18%
- Mid-Cap Value – 4.88%/ 1.13%
- Mid-Cap Blend – 4.49%/0.04%
- Mid-Cap Growth – 3.83%/ -0.09%
- Domestic Equity Funds 3.02%/ -0.62%
- S&P 500-Stock Index 1.56%/ -1.64%
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