SECOND QTR. ROUNDUP
etsy Conklin considers herself more of a saver than investor. But, after watching the stock markets soar to exciting new levels over the past couple of years, and listening to her friends boast about all the money they've made, she figured it was time to join the crowd.
So she moved two-thirds of the money she had in her IRA from a money market mutual fund into a S & P 500 index fund. That was in early April. Today she's wishing she hadn't.
"I don't like losing any money, " says the West Palm Beach resident. "So I don't know if I should move things back the way they were or what?"
The second quarter of this year was not kind to most mutual fund investors---new or experienced ones. Of the 5434 various U.S. equity funds tracked by Lipper, Inc., 4105 of them had negative returns from March 31 through June 30. And, as far as Conklin's investment goes, S & P 500 funds were only down 2.89 percent while shares of the average U.S. diversified equity fund were off 3.15 percent at quarter's end.
The percentage of actively managed U.S. stock funds that outperformed S & P 500 objective funds: 46.3 percent during the second quarter, 66.4 percent year-to-date.
Hardest hit during this 12-week period were telecommunications funds, down on average 13.87 percent; China Region funds, -12.45 percent; Pacific Region funds, -12.26 percent; and emerging markets funds, off 12.907 percent.
Individual funds that racked-up really lousy second quarter returns included Frontier's Equity Fund, down 42.82 percent; Potomac's Internet Fund, off 39.29 percent; the Jacob Internet Fund, down 36.76 percent; and ProFunds:Ultra OTC fund, down 36.44 percent.
On the other hand, there were winners---particularly in one fund sector.
Twenty of the twenty-five top performing second quarter winners were Health/Biotech funds. Big performance numbers were posted by World Funds: Genomics fund, up 39.01 percent for the three-month period; Orbitex: Health & Biotech fund, up 29.32 percent; Vertex Contra fund, (a multi-cap value fund), up 29,18 percent; and the Dresdner RCM: Biotech fund up 27.32.
Even shareholders in twenty-one of the twenty-five largest mutual funds around didn't fare well: The Janus Twenty fund was down 12.28 percent; American Century's Ultra fund, off 10.31 percent; and the Fidelity Growth Company fund, off 8.18 percent. The four funds in that grouping with performance figures on the plus-side between March 31 and June 30 included the Fidelity Growth & Income fund, up 0.21 percent; PIMCO: Total Return, up 1.80 percent; Vanguard's Wellington Fund, ahead 0.25 percent; and Fidelity's Puritan Fund, up 0.58 percent.
But one quarter doesn't make a year and anyone selling mutual funds would probably be quick to tell novice investors like Conklin to look at the broader picture before deciding whether or not to bail on her long-term fund investment or switch her fund pick.
Performance numbers for the first half of this year, for instance, show the average stock fund with a total return that's up 3.65 percent.
Health/Biotechnology funds have been the year's hands-down category winners, up on average 39.11 percent from Dec. 31, 1999 through June 30, 2000. Gold Oriented funds the biggest losers, down 14.85 percent, with Pacific Region funds right on their tail, off 13.59 percent for the year. S & P 500 Index Objective Funds were almost flat, down 0.85 percent for the year.
As for Conklin's predicament, one thing the recent market has taught her first-hand is that investing comes with no guarantees.
"When the market turns south, there are precious few places to hide, " says Ed Rosenbaum, Lipper's vice president and director of research. " It is, however, still true that long-term returns for equities as an asset class are very strongly positive. But that's not the same as saying your performance is going to get there in a straight line upward."
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