Tech holdings power hefty rebounds in major stock funds

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Technology stocks are making the difference in the turnarounds of some of the biggest stock mutual funds this year.

With Monday’s strong rally, the Standard & Poor’s 500 index climbed back into the black for the year: The year-to-date total return (capital gain plus dividends) for the Vanguard 500 Index fund, which replicates the S&P 500, was a positive 1.4% at the day’s close.

But investors in some well-known stock funds already are up by double-digit percentage amounts this year. Fidelity Magellan, for example, was up 16.2% through Monday. The Janus Twenty fund showed a gain of 15.2%.

The biggest U.S. stock fund, the American Funds group’s Growth Fund of America, was up 9.2%.

Note, though, that all three of those funds suffered worse than the 36% drop in the average domestic stock fund last year. Magellan dived 49% in 2008, Janus Twenty lost 42% and Growth Fund of America sank 39%.

So some of this year’s rebound reflects the snap-back in some of the most beaten-down stocks in the funds’ portfolios.

In addition, though, by maintaining substantial holdings of tech stocks that were hit hard last year, the funds have benefited as that sector has resurged. Tech is the best performer of the 10 major industry sectors in the S&P 500 this year, up 19.4% through Monday.

Magellan’s biggest holdings as of March 31 included fiber-optics giant Corning Inc., which has jumped 59% this year after diving 60% last year; semiconductor manufacturing equipment maker Applied Materials, up 21% this year; and Apple Inc., up 55%.

At Janus Twenty, Apple was the No. 2 holding as of March 31. The fund also had big stakes in Blackberry maker Research in Motion (up 85% this year) and Cisco Systems (up 19%).

Growth Fund of America’s top five holdings as of March 31 all were tech issues, including Google Inc. (up 30% this year), Oracle Corp. (up 6%), Apple and Cisco.

Among other big funds, Fidelity Contrafund has been helped by tech holdings including Google and Apple this year, but those gains have been offset by steep declines in some of the brand-name consumer stocks that had held up well in 2008, including McDonald’s (down 14% year-to-date) and Procter & Gamble (down 19%).

Dodge & Cox Stock, which sank 43% last year, had Hewlett-Packard Co. as its single biggest holding as of March 31, but it hasn’t helped the fund’s cause: HP is a laggard among tech issues this year, up just 1% since Dec. 31.

-- Tom Petruno