Markets & Finance

A Bit of a Fall Blossom


Growth funds got going last month as investors saw major comebacks for the same tech portfolios that have spent much of 2001 adrift. Bond-fund investors benefited from an expected rate cut, which the Federal Reserve Board came through with in early November, and a surprise move from the Treasury Dept. to eliminate the 30-year bond.

The October rally happened in spite of a plethora of bad earnings, lowered expectations, and sour projections for the fourth quarter. Factor in the war in Afghanistan and the domestic terror threat, and October looks like a very good month indeed. The Standard & Poor's 500-stock index recorded a 1.9% return for the month, and the Dow showed a 2.7% gain. Most impressive was the Nasdaq's 12.7% return for the month, fueled by the comeback by tech stocks.

Technology funds averaged a rousing 16.2% total return during October (see Mutual Fund

Scoreboard). Still, the rally did little to help the sector's numbers for 2001 -- as of Oct. 31, the category was down 44.2% for the year. Tech-heavy small-cap growth funds zipped to a 7.6% gain in the month but nevertheless were down 24.1% for the year. Natural-resource funds posted a 7.1% gain for October, a very good showing but not enough to wipe away the group's negative 15% total return year-to-date.

OVERSEAS BOOST. Mid-cap growth funds posted a 6.1% average total return, while mid-cap blend funds and mid-cap value managed a bit less, with 3.8% and 2.3% gains, respectively. Large-cap growth turned in a 4.1% tally for October, while large-cap blend and value funds finished with more modest returns of 2.2% and 1% each, respectively.

Overseas investors got a nice boost, too. BusinessWeek data show funds investing around the globe finished the month with an average 3.5% total return. Portfolios focusing on Pacific Rim nations excluding Japan did the best out of our overseas groups, with a 6.4% total return. Emerging-markets funds were strong as well, posting a 6% average return in October. Europe funds didn't match those gains, logging a 3.4% return for the month, while funds investing in a troubled Japanese economy managed a 3.2% return for investors.

As great as October's numbers were for tech and growth funds, the month was rather hard on some of the market's traditional storm shelters. Real-estate funds, strong for most of 2001, were hit the hardest of all equity categories, with a -2.9% total return in October. The turnaround came as concerns over a slowing economy hit stocks in the group.

SAPPING POWER PRODUCERS. Also, golddiggers saw a negative number for the first time in recent months as precious-metal funds posted a -2% total return. World panic has nevertheless managed to keep the glitter in gold funds, which are up an average of 14% year-to-date. Headline after headline spotlighting a slowing economy hurt the stocks of power producers and sent utility funds to a average -2% total return in October, capping a negative 22.3% fall for 2001 so far.

With tech funds on a roll, it comes as no surprise that one of the group's members -- Berkshire Technology (BTECX) -- led all equity funds with a thundering 37.2% total return last month. The fund carries generous positions in computer and computer-storage shares, but it hasn't managed to dodge the tech sector's woes for most of 2001. Berkshire Tech closed a banner October with a -75.3% total return to show for the year so far.

A tech fund led our equity A-list funds last month as well. The North Track PSE Tech 100 Index Fund (PPTIX) ended October with a 15.7% total return for the month, helping to whittle down its losses for the year so far to 27.1%. The fund buys shares listed on the Pacific Stock Exchange Technology index and is typically steeped in chip, computer, and software shares, although it does hold a large weighting in biotech as well.

QUICK LEAP. October was also a good month for bond-fund investors. Not only did they benefit from the Federal Reserve Board's ninth rate cut this year but they also got a nice boost as well from the Treasury's unexpected decision on Oct. 31 to stop issuing 30-year bonds. That sent bond prices surging, lifting almost every segment of the group. The Lehman Aggregate index posted a 2.1% total return in October, finishing up 10.7% for the year so far.

BusinessWeek's rolls show bond funds up an average of 1.5% for October. First place on our lists went to convertible funds, which parlayed a strong stock-market showing into a 3.4% total return in October. Long government funds tied that mark with a 3.4% gain, too. Junk-bond funds thwarted worries over possible defaults in the months ahead by posting a 2.3% climb.

American Century Target Maturity 2030, a fund investing in long-term Treasury strips, took a leap in value the minute Treasury shut down its 30-year offering, jumping 6.7% on Oct. 31.

21 NEWCOMERS. Last month, the honors of the best performer among our fixed-income A-list went to Sit US Government Securities (SNGVX), a fund that invests in short-term government paper and Washington-backed mortgages. The fund managed a 1.6% total return for the month and had provided investors a 9.3% boost in 2001 as of Oct. 31.

The month's results lifted 21 new funds onto the BusinessWeek Equity A-list of high return, low-risk funds, including a number of growth and small- and mid-cap portfolios. A total of 19 funds were downgraded with a number of utility and balanced funds falling from our A-list. Turnover on our Fixed-Income A-list was far less -- we welcomed six newcomers and saw another six downgraded as of Oct. 31.

Equity A-List Upgrades

ARK Small Cap Equity Retail A

Atlas Assets Global Growth A

Fidelity Advisor Mid Cap T

Fidelity Mid Cap Stock

Fidelity Select Biotechnology

Fremont US Micro Cap

Julius Baer International Equity A

Keeley Small Cap Value

Kinetics Internet

Liberty Acorn Z

Marshall Mid Cap Value Inv

Merrill Lynch Master Small Cap Value B

North Track PSE Tech 100 Idx A

Purisima Total Return

RS Diversified Growth A

Royce Pennsylvania Mutual Inv

Sentinel Small Company A

Smith Barney Security & Growth A

Strong Opportunity Inv

T Rowe Price Health Sciences

Vanguard Capital Opportunity

Equity A-List Downgrades

Amer Century Utilities Inv

Capital Income Builder A

Century Shares

Delaware RE Inv Tr A

Eaton Vance Growth & Inc A

Fifth Third Strategic Income Adv

GMO US Core III

Gabelli Westwood Balanced AAA

ICAP Equity

Lord Abbett Mid Cap Value A

MFS Total Return A

MS Glbl Utilities B

Meeder Advisors Utility Growth A

Mosaic Equity Tr Balanced

Selected American

Sound Shore

Van Kampen Growth & Income A

Vanguard Equity Income

Vanguard Wellington Inv

Fixed-Income A-List Upgrades

Federated Limited Duration Instl

Fifth Third MI Municipal Bond Inv

Goldman Sachs Adj Rate Gov A

T Rowe Price Short Term Bond

WPG Intermediate Muni Bond

Wells Fargo National Limited Tm Tax Free I

Fixed-Income A-List Downgrades

Eaton Vance Prime Rate Reserves

Kent MI Municipal Bond Inv

One Group Short Term Bond I

State Farm Municipal Bond

USAA Short Term Bond

Vanguard Muni Bond Limited Term

By James A. Anderson in New York


Best LBO Ever
LIMITED-TIME OFFER SUBSCRIBE NOW

Sponsored Financial Commentaries

Sponsored Links

Buy a link now!

 
blog comments powered by Disqus