Stock Funds Lose 2% in First Quarter, on Average
Stock mutual fund investors won’t be happy with the minus signs they’ll see in front of many funds’ returns for the first quarter. But the figure concern is likely to be what happens next.
Preliminary data from Lipper Analytical show the average general U.S. stock fund lost 2% in the quarter on a total-return basis, the first quarterly loss since the fourth quarter of 1994.
Most fund categories ended with losses, including some categories that investors might have expected to perform better as hedges--including natural resources funds and gold funds.
The quarter’s highlights:
* Among major fund categories, small-company stock funds recorded the biggest quarterly loss, down 7% on average as many smaller growth stocks--especially tech issues--collapsed amid concerns about high stock valuations and worries about the strength of earnings growth.
The tech fund category itself lost 7.9% for the quarter, after surging 19% last year.
* The winningest general fund category, not surprisingly, was the blue-chip Standard & Poor’s 500 index fund category, gaining 2.5% on average. The big-name stocks that dominate the index were in hot demand for most of the quarter--until recently, at least.
* Growth stock funds were off 1.2% for the quarter. Despite losses in tech shares, many of these funds also own the major blue-chip names.
* Growth-and-income funds, considered more conservative than most other categories, gained 1.3% for the quarter, on average. They, too, are generally focused on blue chips.
* The average international fund produced a 1.4% gain, providing refuge for U.S. investors, as many European and Latin American markets outperformed the U.S. market.