Dian's Column
Dian's Archive

Lavine/Liberman Archive




Lipper
Muriel Siebert & Co.


Not much particularly rosy in first quarter returns



The fund performance numbers are out and the picture they paint is a pretty bland one.

According to Lipper, the average stock fund was up less than one percent, 0.78 percent to be exact, for the first quarter of 2002. While that's nothing to crow about, far more of the various fund types scored positive rather than negative returns. And that's good news.

Top performers among U.S. Diversified Equity Funds were the small-cap value funds; they were up on average 8.7 percent. Behind them were mid-cap value funds, up 6.39 percent. The biggest losing category? Mid-cap growth funds. They were off on average 3. 86 percent.

Move into the Sector Fund arena and it was natural resources funds that lead the way. Of the 76 funds making up that category, the average performance of those funds was a positive 11.27 percent. The biggest loses among Sector Funds were telecommunication funds--- down well over 18 percent. As for the average Sector Fund, it was down 2.2 percent.

If you'd started the year by investing in any World Equity Funds, kudos to you. The average fund in this grouping of 12 different fund types was up 3.8 percent.

The fund type that took home the gold in this category were in fact gold funds. They moved ahead, on average, over 35 percent. Next in line were emerging markets funds, up 12.2 percent; then Pacific ex-Japan funds, up 11.98 percent; and Latin American funds, ahead 9.4 percent.

All but one of the Mixed-Equity Funds group showed positive returns--- albeit the strides ahead were tiny and averaged 0.26 percent. Balanced target maturity funds were the losers in that pack--they were down 0.62 percent: Global Flexible Portfolio Funds, the winners, up slightly over 1 percent on average.

Leaving the open-end mutual fund arena and moving into Exchange Traded Funds, (ETFs), you'll find performance there was better, but only by a hair as the average ETF was up 1.82 percent during the first quarter.(Exchange traded funds are investment companies whose shares trade like stocks do, on the exchanges, and thus those shares can be bought and sold all throughout the day.)

If you're looking for the hot ones, the top three ETFs were iShares:MSCI S. Korea, it's total return was a positive 29.9 percent; iShares:Mexico Free, up 17.07 percent; and, iShares: Austria, ahead 11.5 percent.

Losers included iShares: GS Network Idx, down 19.41 percent; streetTRACKS: MS Internet, off 14 percent; and, iShares Dow US Telecom, down so far this year, 16.2 percent.

ETFs are becoming more and more popular. In 1993, there was one domestic ETF around, according to the Investment Company Institute, the mutual fund industry's trade association. By year end 2000, the number of domestic ETFs had grown to 55 and global/international ETFs totaled 25. Today, there are many more and come with brand names like iShares, SPDRs and streetTRACKS.

Harold Evensky, chairman of Evensky, Brown & Katz, wealth managers in Coral Gables, Fl, is a big fan of Exchange Traded Funds. He likes them for a number of reasons. " ETFs provide a good compliment to a portfolio because you can quickly target a particular sector of the economy, or the world, that you'd like to be invested in. Then, investing in them is very cost efficient, tax efficient, and you can move in and out of them quickly if you need to, " he explains.

On the downside Evensky says they aren't right for anyone using a dollar-cost-averaging investment strategy. That's because buying a little at a time means paying stock commission prices with every new purchase. "They are more expensive than funds if you are doing a lot of small purchases. But, if you're investing for a long period of time, they are extremely inexpensive."

As for the risks, of course they've got them. And, given that these baskets of stocks basically combine to form various indexes, that sector representation means that there's likely to be more volatility that what you'd find in a more diversified portfolio. Then again, index-type funds have often out-performed active managed portfolios. So, once again, there are no guarantees, only opportunities.

#

Dian Vujovich is a nationally syndicated mutual fund columnist, author of a number of books including Straight Talk About Mutual Funds (McGraw-Hill), and publisher of this web site.


To read more articles, please visit the column archive.




[ top ]