A September Slump for Funds


By Amey Stone The bull market took a temporary breather in September as investors suffered through a brief bout of weaker-than-expected economic news as well as a troublesome dip in the dollar. Bond funds substantially outperformed stock funds in the month as interest rates dipped. The average diversified equity fund fell 0.6% in the month, while the average bond fund climbed 2.4%, according to data from Standard & Poor's Fund Services. (For full results of more than 9,000 funds, see BW Online's Mutual Fund Scoreboard.)

Nonetheless, equity funds managed to outperform the S&P 500 index, which fell 1.1% in September. That continued a significant trend that has been a saving grace of the scandal-plagued mutual-fund industry this year. The S&P 500 returned 14.7% in 2003 through the end of September, while the average equity fund is up 18.7% for the same period. Year-to-date, the average equity fund outshone the S&P 500 quite substantially, gaining 19%, vs. a 14.7% hike for the index.

PLAYING DEFENSE. International stock funds performed better than U.S. equity funds in September, gaining 2%. Japan funds were the top-performing fund category with a 5.5% gain, thanks to improving economic growth in the country. Matthews Japan (MJFOX), the top-performing Japan fund, jumped 13.3%. Diversified Asia funds that include Japan gained 3.8%, while funds that exclude Japan climbed just 0.9%.

Some defensive equity-fund categories held their own. Real-estate funds gained 3.4%. Alpine International Real Estate Equity (EGLRX), one of the best in that category, jumped 7.2%. Precious-metals funds gained 2.7%. Scudder Gold and Precious Metals (SCGDX) climbed 8.6%, and U.S. Global World Precious Minerals (UNWPX) gained 7.7%.

Technology funds, which are up an impressive 40% this year, flagged in September as high-flying chip stocks took a breather. Tech funds fell 2.7% on average in the month, with funds that hold a lot of semiconductor names doing much worse. ProFunds Semiconductor Ultrasector (SMPIX) fell 10.9%, but is still up 90.5% year-to-date. Berkshire Focus (BFOCX), a technology fund, fell 9.7%, but is up 42% in 2003.

NET GAINS. Weakness in technology stocks crimped many growth funds, which tend to hold a lot of tech names. The worst-performing category was midcap growth funds, which fell 2.8% on average in September. Apex Mid Cap Growth (BMCGX) is an exception to that rule. It jumped 10.6% in September and is up a stunning 132% so far in 2003 on the strength of several holdings in the Internet sector.

Small-cap growth funds, which have been 2003's stars, fell 2.2%. They're up 28.5% on average in 2003 and are the best-performing diversified U.S. equity category this year.

Funds Rated A in September:

1st Source Monogram Special Equity

ABN AMRO Mid Cap N

ABN AMRO Veredus Aggressive Growth N

AIM Opportunities I A

Aegis Value

Al Frank

Alpine US Real Estate Equity Y

Amer Century Sm Cap Vl Inv

Armada Small Cap Value I

Artisan Mid Cap

Artisan Small Cap Value

BNY Hamilton Sm Cap Gr Inv

Baron Growth

Baron Small Cap

Bjurman Barry Micro Cap Growth

BlackRock International Opportunities Inv A

BlackRock US Opportunities Inv B

Boston Partners Small Cap Value II Invest

Brazos Micro Cap Y

Bridgeway Aggressive Investors 1

Bridgeway Micro Cap Limited

Bridgeway Ultra Small Company

Bridgeway Ultra Small Company Market

Bruce

Buffalo Small Cap

CGM Focus

CGM Realty

CNI Charter RCB Small Cap R

Calamos Growth A

Cohen & Steers Special Equity

Commonwealth New Zealand

Conseco Equity Y

Delafield

Dreyfus Gr & Val Fds Midcap Value

Dreyfus Premier Emerging Markets A

Driehaus Asia Pacific Growth

Driehaus Emerging Markets Growth

Eaton Vance Wldwd Hlth Sciences A

Emerald Select Banking & Finance A

Evergreen Precious Metals Holdings A

Excelsior Mid Cap Value

FBR Small Cap Financial A

FBR Small Cap Value A

FMC Strategic Value

FMI Focus

Fidelity Canada

Fidelity Japan Small Co

Fidelity Low Priced Stock

Fidelity New Millennium

Fidelity Select Brokerage & Investment Mgt

Fidelity Select Gold

Fidelity Select Medical Systems & Equipment

Fidelity Select Transportation

Fidelity Small Cap Stock

Fifth Third Micro Cap Value Instl

First American Small Cap Growth Opport Y

First Eagle Gold

First Eagle Overseas A

Franklin Biotechnology Discovery A

Franklin Gold & Precious Metals A

Fremont US Micro Cap

Fremont US Micro Cap Inst

l

GMO Emerging Countries III

Gabelli Gold

Gabelli Westwood Mighty Mites AAA

Goldman Sachs Small Cap Value A

Hartford Mid Cap A

Heartland Value

Hennessy Cornerstone Growth

Heritage Aggressive Growth A

Hotchkis & Wiley Mid-Cap Value I

ICM/Isabelle Small Cap Value Inv

ICON Energy

ICON Information Technology

IMS Capital Value

ING Russia A

INVESCO Leisure Inv

Ivy Global Natural Res A

JPMorgan Mid Cap Value I

Janus Mid Cap Value Inv

Janus Small Cap Value Inv

Jennison Natural Resources A

Kinetics Internet

Legg Mason Eq Tr Special Invmnt Prim

Legg Mason Glbl Tr Emerging Mkts Prim

Liberty Acorn Z

Liberty Newport Greater China A

Liberty Small Cap Z

Lord Abbett Small Cap Value A

MFS International New Discovery A

MTB Small Cap Growth A

Managers Emerging Mkts Eqty

Matrix Advisors Value

Matthews Asian Growth & Income

Matthews China

Matthews Korea

Matthews Pacific Tiger

Meridian Growth

Meridian Value

Merrill Lynch Global Small Cap B

Merrill Lynch Master Small Cap Value B

Morgan Stanley Instl Asian Real Estate B

Morgan Stanley Instl Small Company Gr B

Munder Healthcare B

Munder Micro Cap Equity A

Mutual European Z

NI Numeric Investors Emerging Growth

Needham Growth

Neuberger Berman Genesis Inv

Nuveen NWQ Multi Cap Value R

OCM Gold

Oakmark International Small Cap I

Oakmark Select I

Oberweis Emerging Growth

Oberweis Micro Cap

Olstein Financial Alert C

Oppenheimer Developing Markets A

Oppenheimer Gold & Special Minerals A

Osterwei

s

PBHG Mid Cap

PIMCO PEA Renaissance A

PIMCO RCM Biotechnology D

PIMCO RCM Global Healthcare D

Perkins Discovery

Perritt Micro Cap Opportunities

Pioneer Small Cap Value A

Quaker Aggressive Growth A

RS Contrarian Value

RS Diversified Growth

RS Global Natural Resources

RS Partners

RS Smaller Co Growth

Reserve Private Eqty Small Cap Growth R

Rockland Small Cap Growth

Royce Low Priced Stock

Royce Micro-Cap Inv

Royce Opportunity Inv

Royce Special Equity

Royce TrustShares Inv

Rydex BioTechnology Inv

Santa Barbara Bender Growth Y

Scudder Gold & Precious Metals S

Scudder Micro Cap Invest

Security Mid Cap Growth A

Security Mid Cap Value A

Sentinel Small Company A

Smith Barney Aggressive Growth A

State Street Research Aurora A

State Street Research Global Resources A

Strong Advisor Small Cap Value Z

Strong Asia Pacific

Strong Enterprise Inv

T Rowe Price Intl Discovery

TCW Galileo Asia Pacific Equity I

TCW Galileo Opportunity N

TCW Galileo Value Opportunities I

Third Avenue Real Estate Value

Third Avenue Small Cap Value

Tocqueville Gold

Tocqueville Small Cap Value

Touchstone Emerging Growth A

Turner Micro Cap Growth

Turner Small Cap Value

UBS US Small Cap Growth Y

US Global Accolade Regent Eastern Euro

USAA Precious Metals & Minerals

Value Line Emerging Opportunities

Van Kampen Global Franchise A

Vanguard Capital Opportunity

Vanguard Health Care

Vanguard International Explorer

Vanguard Precious Metals

WM West Coast Equity A

Wasatch Core Growth

Wasatch Micro Cap

Wasatch Small Cap Growth

Wasatch Small Cap Value

Wasatch Ultra Growth

Westport R

Westport Select Cap I

William Blair International Growth N

iShares MSCI Malaysia Index

Stone is a senior writer at BusinessWeek Online and covers the markets as a Street Wise columnist and mutual funds in her Mutual Funds Maven column


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