A Blooming Good Month for Funds


By Angelina Dance Following dismal March and April performance, domestic equity funds snapped back in May, advancing 4.5% for the month, vs. a 3.0% gain for the S&P 500, according to Standard & Poor's. On average, domestic equity funds fell 3.43% in April and 1.9% in March.

All fund categories ended May in positive territory. Small-cap growth funds were the brightest stars, returning 6.5% on average for the month, while large-cap value funds trailed, but with a respectable 2.6% gain. For the first time this year, growth funds actually started to outperform their value counterparts, gaining 5.6% on average as of May 31, vs. value funds' 3.9% average return. Market sectors helping to boost monthly performance for funds were technology and consumer discretionary, which both posted strong gains. (For complete results of more than 5,000 funds, see BW Online's Interactive Mutual Fund Scoreboard.)

At the top of this month's review were a number of index-tracking funds, which seek to provide investment results that correspond to twice the daily performance of benchmarks such as the Nasdaq-100 index. These funds employ leverage to magnify gains and losses, resulting in greater volatility and risks, especially when the indices they track are concentrated in specific sectors such as technology. ProFunds: UltraOTC/Iv (UOPIX) jumped 17.6% in May, as did Rydex Dynamic Funds: Velocity 100 Fund/HR (YVYX). Both track the Nasdaq 100.

Equity Funds Rebound

Fund Investment Style

Average Returns May 2005 (%)

Large Cap Growth

4.81

Large Cap Value

2.57

Large Cap Blend

3.22

Mid Cap Growth

6.13

Mid Cap Value

4.36

Mid Cap Blend

4.72

Small Cap Growth

6.13

Small Cap Value

5.23

Small Cap Blend

5.39

All Cap Growth

4.84

All Cap Value

3.34

Domestic Equity Funds (excludes sector and balanced funds)

4.45

S&P 500-Stock Index

3.00

May marked a sharp turnaround in almost all areas of the equity markets, notes Sam Stovall, chief investment strategist at Standard & Poor's. "The defensive tone the market had been adopting since the beginning of the year was exchanged for a more optimistic one as investors felt the Fed was close to ending the rate-tightening policy," he says.

Projected slow downs in global economic growth, the lack of inflation seen by recent consumer price index (CPI) figures, energy prices averaging $50 per barrel, and the low yield on the 10-year note indicated investors weren't too worried about the long term impact of inflation, Stovall adds.

Investors may mistake May's performance as a shift to bullish from bearish. However, Stovall believes that investors shouldn't consider the 5.8% year-to-date decline for the S&P 500 through late April and softness in the March economic data as indicating either a bear market or a recession. "The month of May was a counter-trend rally where investors used good news as a reason to temper their bearishness and cancel out short-selling contracts," Stovall says.

WAITING ON THE FED. After another Fed increase, overnight interest rates were raised by a quarter percentage point, to 3.0% at the start of the month. Investors are seeking a conclusion to the rate tightening, but Standard & Poor's Investment Policy Committee puts the yearend federal funds rate at 4.25%, believing the "rate-tightening game" may go on for more than nine innings.

"Once there is significant evidence that the Fed is finished increasing rates, investors will begin to adopt late-cycle patterns," said Rosanne Pane, Standard & Poor's Mutual Fund Strategist. Typically, at such a time large companies perform better, while smaller companies tend to have higher growth rates.

Here are the top-ranked funds by BusinessWeek and their five-year annualized performance.

A-List Equity Funds

Fund

Symbol

5-Year Annualized Pre-Tax Return (%)

ABN AMRO Real Estate N

ARFCX

19.0

AIM Gold & Precious Metals Inv

FGLDX

17.6

AIM Real Estate A

IARAX

21.5

AXP Precious Metals A

INPMX

17.5

Adelante US Real Estate Securities Y

LLUYX

19.6

Aegis Value

AVALX

19.2

AllianceBernstein Real Est Invstmnt Adv

ARSYX

19.5

AllianceBernstein Real Est Invstmnt Instl I

ARIIX

18.6

Allianz NFJ Small Cap Value A

PCVAX

18.3

Alpine International Real Estate Equity Y

EGLRX

20.6

Alpine Realty Income & Growth Y

AIGYX

21.8

Alpine US Real Estate Equity Y

EUEYX

33.8

Amer Beacon Small Cap Value PlanAhead

AVPAX

21.9

Amer Century Glbl Gold Inv

BGEIX

20.5

Amer Century Real Estate Inv

REACX

20.1

Amer Century Sm Cap Vl Inv

ASVIX

19.5

Amer Century Sm Company Inv

ASQIX

15.6

Ariel

ARGFX

16.2

Armada Small Cap Value I

AMRIX

15.3

Artisan Small Cap Value

ARTVX

17.0

Berwyn

BERWX

19.9

Bjurman Barry Micro Cap Growth

BMCFX

15.3

BlackRock Global Resources Inv A

SSGRX

27.7

Boston Company International Small Cap

SDISX

14.5

Boston Company Small Cap Value

STSVX

17.5

Brazos Real Estate Securities Y

BJRSX

18.2

Bridgeway Micro Cap Limited

BRMCX

17.5

Bridgeway Ultra Small Company

BRUSX

27.0

Bridgeway Ultra Small Company Market

BRSIX

21.5

Bruce

BRUFX

32.6

Buffalo Small Cap

BUFSX

16.3

Burnham Financial Serv A

BURKX

26.2

CGM Focus

CGMFX

29.9

CGM Realty

CGMRX

27.8

CRM Small Cap Value Instl

CRISX

16.1

Century Small Cap Select Instl

CSMCX

19.0

Cohen & Steers Realty Focus Instl

CSSPX

24.4

Cohen & Steers Realty Income C

CSCIX

18.3

Cohen & Steers Realty Shares

CSRSX

20.3

Cohen & Steers Realty Shares Instl

CSRIX

20.5

Columbia Acorn USA Z

AUSAX

14.0

Columbia Real Estate Equity Z

CREEX

17.6

Columbia Small Cap Z

SMCEX

14.0

Commonwealth New Zealand

CNZLX

14.8

Consulting Grp Cap Mkts SmCp Vl Eq

TSVUX

15.3

Davis Real Estate A

RPFRX

18.9

Delafield

DEFIX

17.3

Delaware American Services A

DASAX

17.2

Delaware Emerging Markets A

DEMAX

16.0

Delaware RE Inv Tr A

DPREX

18.7

Diamond Hill Bank & Financial A

BANCX

23.2

Dreyfus Premier Sm Cap Val A

DSVAX

16.4

EII Realty Securities Instl

EIIRX

17.8

Eastern European Equity A

VEEEX

16.2

Evergreen Precious Metals A

EKWAX

25.7

Evergreen Small Cap Value I

ESKIX

14.2

Excelsior Real Estate

UMREX

19.0

FBR Small Cap

FBRVX

17.7

FBR Small Cap Financial

FBRSX

25.6

FMC Strategic Value

16.4

Fairholme

FAIRX

17.6

Fenimore Equity Income

FAMEX

14.0

Fidelity Low Priced Stock

FLPSX

18.7

Fidelity Real Estate Investment

FRESX

20.2

Fidelity Select Construction & Housing

FSHOX

19.9

Fidelity Select Gold

FSAGX

17.0

Fidelity Select Home Finance

FSVLX

14.7

Fidelity Select Medical Delivery

FSHCX

24.0

Fifth Third Micro Cap Value Instl

MXAIX

17.0

First American Real Estate Securities Y

FARCX

20.6

First Eagle Global A

SGENX

17.2

First Eagle Gold A

SGGDX

26.9

First Eagle Overseas A

SGOVX

17.4

Forward Emerald Select Banking & Finance A

HSSAX

21.8

Forward Uniplan Real Estate Investment

FFREX

17.3

Franklin Balance Sheet Invmt A

FRBSX

16.6

Franklin Gold & Precious Metals A

FKRCX

16.8

Franklin MicroCap Value

FRMCX

20.5

Franklin Real Estate Sec A

FREEX

19.0

Gabelli Gold AAA

GOLDX

24.1

Goldman Sachs Mid Cap Value A

GCMAX

16.1

Goldman Sachs Real Estate Sec A

GREAX

19.8

Goldman Sachs Small Cap Value A

GSSMX

15.9

Harris Insight Small Cap Value N

HSVAX

16.8

Heartland Select Value

HRSVX

14.9

Heartland Value

HRTVX

16.6

Heartland Value Plus

HRVIX

14.4

Heitman REIT PBHG

PBRTX

19.4

Hilliard Lyons Senbanc

SENBX

18.4

Hotchkis & Wiley Mid-Cap Value I

HWMIX

20.3

Hotchkis & Wiley Small Cap Value I

HWSIX

28.4

ICON Energy

ICENX

17.5

ING Precious Metals

LEXMX

18.5

ING Russia A

LETRX

27.0

Ivy Global Natural Res A

IGNAX

19.9

Ivy Real Estate Securities A

IRSAX

20.3

J Hancock Classic Value A

PZFVX

15.8

J Hancock Real Estate A

JREAX

17.8

JPMorgan Small Cap Value Sel

PSOPX

17.9

JPMorgan US Real Estate A

SUSIX

18.9

James Advantage Small Cap

JASCX

16.8

Janus Mid Cap Value Inv

JMCVX

15.2

Jennison Natural Resources A

PGNAX

17.5

Keeley Small Cap Value

KSCVX

16.6

Kensington Strategic Realty A

KSRAX

20.3

Kinetics Paradigm

WWNPX

16.3

Kinetics Small Cap Opportunity

KSCOX

15.6

Legg Mason Eq Tr US Small Cap Vl Prim

LMSVX

17.0

Longleaf Partners Small Cap

LLSCX

14.0

Lord Abbett Small Cap Value A

LRSCX

16.2

MainStay Small Cap Opportunity I

MOPIX

16.5

Managers Real Estate Securities

MRESX

17.4

Marshall Mid Cap Value Inv

MRVEX

14.8

Matthews Asian Growth & Income

MACSX

17.3

Matthews China

MCHFX

14.1

Matthews Korea

MAKOX

18.8

Morgan Stanley Instl European Real Estate A

MSUAX

23.5

Morgan Stanley Instl US Real Estate A

MSUSX

20.0

Morgan Stanley Real Estate B

REFBX

18.7

Munder Real Estate Eq Invmnt A

MURAX

18.7

Munder Small Cap Value A

MNVAX

19.7

Mutual Financial Services A

TFSIX

16.2

Neuberger Berman Genesis Inv

NBGNX

15.9

OCM Gold

OCMGX

20.5

Oakmark Global I

OAKGX

18.8

Oakmark International Small Cap I

OAKEX

16.3

Oberweis Micro Cap

OBMCX

14.6

Oppenheimer Gold & Special Minerals A

OPGSX

19.9

Pacific Advisors Small Cap A

PASMX

17.1

Pacific Capital Small Cap Y

PSCYX

20.9

Perritt Micro Cap Opportunities

PRCGX

19.1

Phoenix Mid Cap Value Fund A

FMIVX

16.1

Phoenix-Duff & Phelps Real Estate Sec A

PHRAX

21.6

Phoenix-Seneca Equity Income A

REALX

17.0

Pioneer Real Estate Shares A

PWREX

19.1

Principal Real Estate Securities A

PRRAX

20.6

Putnam Small Cap Value A

PSLAX

15.8

RS Global Natural Resources

RSNRX

20.0

RS Partners

RSPFX

25.3

RS Value

RSVAX

17.0

Robeco Boston Partners Sm Cap Val II Inv

BPSCX

22.2

Royce Micro-Cap Inv

RYOTX

14.1

Royce Opportunity Inv

RYPNX

14.3

Royce Pennsylvania Mutual Inv

PENNX

15.6

Royce Special Equity

RYSEX

17.9

Royce Total Return Inv

RYTRX

15.1

Russell Real Estate Securities S

RRESX

19.9

STI Classic Small Cap Value Equity L

STCEX

18.1

Schwartz Value

RCMFX

14.6

Scudder Gold & Precious Metals S

SCGDX

24.7

Scudder Small Company Value S

SCSUX

16.1

Security Mid Cap Value A

SEVAX

15.4

Skyline Special Equities

SKSEX

15.6

Spirit of America Real Estate A

SOAAX

19.5

Strategic Partners Real Estate Securities A

PURAX

22.9

Stratton Monthly Dividend REIT

STMDX

18.6

Stratton Small Cap Value

STSCX

19.1

T Rowe Price Latin America

PRLAX

14.6

T Rowe Price Mid-Cap Value

TRMCX

15.6

T Rowe Price Real Estate

TRREX

20.4

T Rowe Price Small Cap Value

PRSVX

17.8

TAMARACK Enterprise S

TETSX

17.5

TAMARACK Microcap Value S

TMVSX

15.2

Texas Capital Value & Growth

TCVGX

19.5

Third Avenue Real Estate Value

TAREX

21.6

Third Avenue Small Cap Value

TASCX

15.2

Third Millennium Russia

TMRFX

23.7

Tocqueville Gold

TGLDX

25.6

Turner Micro Cap Growth

TMCGX

14.9

UBS PACE Sm/Med Co Val Eq P

PCSVX

14.4

UMB Scout Small Cap

UMBHX

15.0

US Global Accolade Eastern European

EUROX

25.4

US Global Inv Global Resources

PSPFX

25.5

US Global Inv Gold Shares

USERX

20.0

US Global Inv World Prec Minerals

UNWPX

21.6

USAA Precious Metals & Minerals

USAGX

25.5

Undiscovered Managers REIT Instl

URTLX

20.1

Van Eck Intl Investors Gold A

INIVX

20.0

Van Kampen Real Estate Securities A

ACREX

19.1

Vanguard Energy Inv

VGENX

16.9

Vanguard Precious Metals

VGPMX

27.4

Vanguard REIT Index

VGSIX

19.1

Vanguard Selected Value

VASVX

14.4

Vanguard Small Cap Value Inv

VISVX

14.1

Wasatch Core Growth

WGROX

16.9

Wasatch Micro Cap

WMICX

22.3

Wasatch Small Cap Value

WMCVX

18.5

Wells Fargo Advtg Small Cap Value Z

SSMVX

15.6

Wells S&P REIT Index A

WSPAX

18.8

Westwood Realty AAA

WESRX

18.1

William Blair Small Cap Growth N

WBSNX

16.9

Wilshire Target Small Co Vl Inv

DTSVX

14.9

Yacktman

YACKX

19.3

Yacktman Focused

YAFFX

18.7

iShares MSCI Australia Index

EWA

15.7

iShares MSCI Austria Index

EWO

25.2

n/i numeric investors Small Cap Value

NISVX

24.8

Dance is an analyst for Standard & Poor's Fund Advisor


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