A Cruel, Cold January for Funds


By Amey Stone So much for the mythical January effect. The market typically rallies in the first month of the year as investors, finished with their tax-loss selling from the year before and armed with annual bonuses, start buying stocks. Not so in 2005.

Stocks cratered the first three weeks in January. Only a spate of buying in the last week, spurred by stronger-than-expected earnings, saved equity-fund portfolios from steeper monthly losses. As it was, the U.S. diversified equity funds fell an average of 2.7% in January, a bit worse than the negative 2.4% returns of the S&P Composite Index, according to data from Standard & Poor's.

Funds that invest internationally typically fared far better than U.S. funds in January, falling just 1.3% on average. (For complete results for more than 5,000 funds, see BW Online's Interactive Mutual Fund Scoreboard.)

TECH'S SLIDE. The best-performing stock funds of the month were those that bet stocks will fall. The No. 1 and No. 2 funds, Rydex Dynamic Venture 100 (RYVNX) and ProFunds UltraShort OTC (USPIX), gained 13.6% and 13.4%, respectively.

Aside from the handful of short-selling funds, the standouts were mostly natural-resources funds (up 1.7% on average) and emerging-market funds (up 0.7% on average). Returns for those two categories tend to correlate, since most of the world's natural resources are in developing nations and energy prices were rising for most of January. T. Rowe Price Emerging Europe & Mediterranean (TREMX) was the third-best-performing stock fund overall. It gained 9.9% in January. Ranked sixth overall was Oppenheimer Real Asset (QRAAX), a fund that invests in commodities.

The worst-performing sector in January was real estate, as investors worried about rising interest rates. Those funds fell 7.2% on average. Technology funds also were hard hit, dropping an average of 6.7%, as investors worried about slowing growth in that pricey sector. ProFunds Internet Ultrasector (INPIX) slid 14.6% in the month, making it the worst tech-fund performer.

ON THE MEND? In general, funds that emphasize value stocks outperformed those that look for earnings growth. For example, large-cap value funds were off 2%, while large-cap growth funds fell 3.2%. The worst-performing fund in the month was Apex Mid Cap Growth (BMCGX), which plopped 17.3%.

Investors who sought safety in bonds were well-served in January. The average tax-free-bond fund gained 0.7%, and the average taxable bond fund ticked up 0.2%. Long-term government bond funds rose 2.2%, the best-performing fixed-income sector. American Century Target Maturity 2030 (ACTAX) was the top bond fund, gaining 8.5% in January.

The New Year didn't start auspiciously for most investors. But by January's end, they had reason to hope that the down weeks of 2005's start were just a temporary New Year's hangover.

The A-List Funds

Fund

5-Year Annualized Pre-Tax Return

ABN AMRO Mid Cap N

15.6

ABN AMRO Real Estate N

19.1

AIM Energy Inv

17.0

AIM Gold & Precious Metals Inv

18.3

AIM Real Estate A

21.9

Aegis Value

20.3

AllianceBernstein Real Est Invstmnt Adv

19.9

AllianceBernstein Real Est Invstmnt Instl I

18.7

Alpine International Real Estate Equity Y

19.7

Alpine Realty Income & Growth Y

23.1

Alpine US Real Estate Equity Y

33.8

Amer AAdvantage Small Cap Value PlanAhead

22.2

Amer Century Glbl Gold Inv

20.3

Amer Century Real Estate Inv

20.1

Amer Century Sm Cap Vl Inv

21.7

Amer Century Sm Company Inv

16.8

Ariel

18.6

Armada Small Cap Value I

19.3

Artisan Small Cap Value

17.9

Berwyn

18.0

Bjurman Barry Micro Cap Growth

17.1

BlackRock Global Resources Inv A

36.7

Boston Partners Long Short Equity Inv

17.2

Boston Partners Small Cap Value II Inv

25.8

Brazos Real Estate Securities Y

18.0

Bridgeway Micro Cap Limited

17.1

Bridgeway Ultra Small Company

27.1

Bridgeway Ultra Small Company Market

21.5

Bruce

34.8

Buffalo Small Cap

18.1

Burnham Financial Serv A

30.8

CGM Focus

32.0

CGM Realty

30.6

CRM Small Cap Value Instl

17.3

Cohen & Steers Realty Focus Instl

19.0

Cohen & Steers Realty Income C

18.6

Cohen & Steers Realty Shares

19.4

Columbia Real Estate Equity Z

18.0

Consulting Grp Cap Mkts SmCp Vl Eq

15.9

Davis Real Estate A

19.7

Delafield

19.5

Delaware American Services A

19.9

Delaware RE Inv Tr A

19.2

Diamond Hill Bank & Financial A

21.5

Dreyfus Premier Sm Cap Val A

17.7

EII Realty Securities Instl

17.7

Emerald Select Banking & Finance A

22.5

Evergreen Health Care A

17.6

Evergreen Precious Metals A

25.2

Evergreen Small Cap Value I

15.7

Excelsior Real Estate

18.8

F Russell Real Estate Securities S

19.6

FBR Large Cap Financial

15.6

FBR Small Cap

19.0

FBR Small Cap Financial

26.9

FMC Strategic Value

20.0

Fairholme

18.9

Fidelity Low Priced Stock

19.7

Fidelity Real Estate Investment

20.5

Fidelity Select Construction & Housing

19.9

Fidelity Select Gold

16.7

Fidelity Select Home Finance

18.0

Fidelity Select Insurance

16.2

Fidelity Select Medical Delivery

22.9

Fidelity Select Medical Systems & Equipment

15.7

Fidelity Select Natural Gas

16.8

Fifth Third Micro Cap Value Instl

19.6

First American Real Estate Securities Y

21.1

First Eagle Global A

17.3

First Eagle Gold A

26.0

First Eagle Overseas A

17.0

Forward Uniplan Real Estate Investment

17.6

Franklin Balance Sheet Invmt A

17.0

Franklin MicroCap Value

20.2

Franklin Real Estate Sec A

19.7

Franklin Small Cap Value A

17.6

Gabelli Gold AAA

22.9

Goldman Sachs Mid Cap Value A

18.2

Goldman Sachs Real Estate Sec A

20.1

Goldman Sachs Small Cap Value A

19.7

Harris Insight Small Cap Value N

18.6

Heartland Select Value

16.2

Heartland Value

16.8

Heartland Value Plus

15.8

Heitman REIT PBHG

19.2

Hotchkis & Wiley Mid-Cap Value I

24.8

Hotchkis & Wiley Small Cap Value I

29.7

ICON Energy

25.7

ICON Financial

16.4

ICON Leisure and Consumer

16.4

ING Precious Metals

17.5

ING Russia A

28.4

Ivy Global Natural Res A

20.9

Ivy Real Estate Securities A

20.4

J Hancock Classic Value A

18.1

J Hancock Real Estate A

17.7

James Advantage Small Cap

18.4

Janus Mid Cap Value Inv

17.3

Jennison Natural Resources A

20.0

Keeley Small Cap Value

17.3

Kensington Strategic Realty A

22.6

Legg Mason Eq Tr US Small Cap Vl Prim

15.8

Lord Abbett Mid Cap Value A

18.0

Lord Abbett Small Cap Value A

18.4

Managers Real Estate Securities

16.7

Marshall Mid Cap Value Inv

16.1

Matthews Asian Growth & Income

16.8

Meridian Growth

15.6

Merrill Lynch Natural Resources A

18.4

Morgan Stanley Instl European Real Estate A

23.7

Morgan Stanley Instl US Real Estate A

19.9

Morgan Stanley Real Estate B

18.4

Munder Real Estate Eq Invmnt B

17.9

Munder Small Cap Value Y

20.9

Mutual Financial Services A

18.2

Neuberger Berman Genesis Inv

18.1

OCM Gold

21.7

Oakmark Global I

20.1

Oakmark International Small Cap I

15.9

One Group Small Cap Value I

20.3

Oppenheimer Gold & Special Minerals A

17.8

PIMCO NFJ Small Cap Value A

19.6

PIMCO PEA Renaissance A

17.0

Pacific Advisors Small Cap A

18.3

Pacific Capital Small Cap Y

22.7

Perritt Micro Cap Opportunities

19.9

Phoenix Mid Cap Value Fund A

19.4

Phoenix-Duff & Phelps Real Estate Sec A

21.3

Phoenix-Seneca Equity Income A

17.6

Pioneer Real Estate Shares A

18.8

Principal Real Estate Securities A

20.0

Putnam Small Cap Value A

17.8

RS Global Natural Resources

25.1

RS Partners

29.0

RS Value

18.3

Royce Low Priced Stock

15.6

Royce Micro-Cap Inv

16.3

Royce Opportunity Inv

16.7

Royce Pennsylvania Mutual Inv

16.5

Royce Premier

15.8

Royce Select

16.3

Royce Special Equity

20.4

Royce Total Return Inv

16.2

STI Classic Small Cap Value Equity L

18.6

Scudder Gold & Precious Metals S

26.0

Scudder Small Company Value S

16.0

Security Capital US Real Estate S

19.4

Security Mid Cap Value A

18.1

Seligman Small-Cap Value A

17.3

Skyline Special Equities

16.7

Smith Barney Small Cap Value A

18.1

Spirit of America Real Estate A

19.3

Strategic Partners Real Estate Securities B

21.1

Stratton Monthly Dividend REIT

18.6

Stratton Small Cap Value

18.7

Strong Advisor Small Cap Value Z

17.8

Strong Mid Cap Disciplined

15.6

T Rowe Price Mid-Cap Value

17.1

T Rowe Price Real Estate

20.6

T Rowe Price Small Cap Value

19.2

TAMARACK Enterprise S

17.8

TAMARACK Microcap Value S

17.0

TCW Galileo Dividend Focused N

15.5

TCW Galileo Value Opportunities I

17.9

Texas Capital Value & Growth

20.1

Third Avenue Real Estate Value

22.7

Third Millennium Russia

23.1

Tocqueville Gold

24.4

UMB Scout Small Cap

16.2

US Global Accolade Eastern European

24.6

US Global Inv Global Resources

25.0

US Global Inv Gold Shares

19.1

US Global Inv World Prec Minerals

20.5

USAA Precious Metals & Minerals

24.6

Undiscovered Managers Behavioral Vl Instl

15.9

Undiscovered Managers REIT Instl

20.3

Van Eck Intl Investors Gold A

20.2

Van Kampen Real Estate Securities A

18.8

Vanguard Energy Inv

20.6

Vanguard Precious Metals

22.2

Vanguard REIT Index

18.9

Vanguard Selected Value

16.6

Victory Real Estate A

17.0

Wasatch Core Growth

18.4

Wasatch Micro Cap

22.8

Wasatch Small Cap Value

20.3

Wells S&P REIT Index A

18.6

Westwood Realty AAA

18.6

William Blair Small Cap Growth N

21.5

Wilshire Target Small Co Vl Inv

16.7

Yacktman

18.4

Yacktman Focused

16.5

iShares MSCI Austria Index

24.2

n/i numeric investors Small Cap Value

27.6

Stone is a senior writer for BusinessWeek Online in New York


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