U.S. Fund Managers Scoring Gains

U.S. stock fund managers are scoring their best returns in more than six years compared with the benchmark Standard & Poor’s 500 index.

In the second quarter, about 65% of domestic stock funds had outperformed the S&P; 500 through last week, buoyed by a rebound in shares of small and medium-sized companies and a rally in energy, aluminum and paper stocks that rose as U.S. and Asian economies accelerated. Just 14% of all stock funds beat the S&P; 500 in 1998.

Top performers in the second quarter among the most widely held funds include the $18.4-billion Vanguard Windsor Fund, up about 15%; the $8.5-billion Franklin Mutual Shares Fund, up 10%; and the $5.7-billion Fidelity Value Fund, up 23%. The three benefited from investors’ confidence that the economy won’t slow.

So-called value stock funds, which invest in companies with low price-to-earnings ratios, have been doing better than growth stock funds for the first time since the summer of 1997, according to industry research firm Morningstar Inc. Large-company value funds have risen nearly 9% in the latest three-month period.