A brighter quarter
NEW YORK – It might be safe now for investors to open both eyes when they look at their quarterly mutual fund statements.
The news won’t be good, as it was two years ago when the stock market was still churning higher. But it won’t be nearly as gruesome as it was a few months ago.
Many fund categories are showing single-digit percentage slides for the January-March quarter, according to Lipper Inc., which tracks fund performance. But that’s a huge victory compared with negative returns of more than 20 percent in the final three months of 2008.
Lipper’s latest figures don’t include the final three trading days of the first quarter but the improvement from the dark months of the fall and late 2008 is clear.
Take large-capitalization growth funds: They are showing a negative average return of 0.14 percent for the quarter. That compares with the 23.3 percent negative return for the fourth quarter.
Ted Aronson, a partner at Aronson-Johnson-Ortiz in Philadelphia, said a stock market rally now in its third week is making returns far more palatable.
“It’s not a bull market but certainly just a boring, blah market and boy does that feel good,” he said, referring to a punishing slide in stocks in 2008 that left the Standard & Poor’s 500 index down 38.5 percent.
Indeed, investors in some specialty funds, which track individual industries or groups of industries, might be surprised to find there isn’t a minus sign before their fund’s return. In the fourth quarter, nearly everything lost ground except funds that placed bets stocks would fall.
But in the first quarter, which ends Tuesday, there were pockets of strength. Science and technology funds posted a 7.8 percent return, while telecommunications funds saw a 3.1 percent return, according to the preliminary figures.
The strong performance of technology-focused stocks has helped the Nasdaq composite index. It’s down only 2 percent for the quarter. The Dow is now down 11.4 percent after an 18.8 percent rally in only 14 trading days. The Standard & Poor’s index is off 9.7 percent.
Some funds could end the quarter with good marks because the rally in stocks has helped lift other investments such as commodities. Some traders are betting that demand for raw materials could pick up if the world’s economy starts to stabilize.
Still, even with a rally in stocks, there are still plenty of hard-hit areas. Real estate funds have posted a negative return of 27.3 percent. Financial services funds, which invest in the troubled banks at the center of the economy’s problems, show a negative return of 19.6 percent.
Diversified U.S. stock funds showed a negative return of 5.2 percent for the quarter, far better than the negative return of 23.2 percent from the fourth quarter.
World equity funds posted a negative return of 5.8 percent for the period compared with 22.6 percent in the prior quarter.