September Was a Breeze for Funds


By Angelina Dance Mutual-fund investors faced fierce headwinds as the third quarter came to a close. Tragic hurricanes pounded the Gulf Coast, and interest rates and oil prices headed higher. Still, U.S. equity funds held up and posted respectable gains in the quarter. The average domestic stock fund rose 4.6% for the three months ended Sept. 30, vs. a gain of 3.5% for the S&P 500-stock index. Year-to-date, the average domestic stock fund is up 4.3%, vs. 2.7% for the S&P 500.

All fund categories finished the quarter in positive territory. Mid-cap growth funds came in first, gaining 6.1% on average. Large-cap value portfolios showed the smallest increases, rising 3.6%. Indeed, growth-oriented funds outperformed their value counterparts for the period. The average growth fund advanced 5.6%, vs. a 4.5% gain for the average value fund.

However, value funds still reign supreme so far this year, gaining 5.4%, vs. a gain of 4.5% for the average growth fund. In fact, all fund style categories are in the black year-to-date, with mid-cap blend funds in first place, up 6.8%.

UPWARD ENERGY. Energy did its part to power stock funds during the quarter. The top overall performing portfolio, Scudder Commodity Securities Fund/Instl (SKIRX), gained 18.5% for the three months. The $62-million large-cap blend fund holds 81 securities and has 56% of its assets invested in energy stocks and 42% in materials. The fund, which was just launched in February, has 53% of its assets in the U.S., and 18% in the U.K.

In the top-performing mid-cap growth category, Hennessy Focus 30 (HFTFX), was the best individual performer, rising 16.1% during the quarter, and 32.4% year-to-date. As of Aug. 31, the $102.6-million fund had 37.5% of its assets in energy stocks, and 30.2% in consumer discretionary issues.

The best performer year-to-date was CGM Focus Fund (CGMFX), returning a whopping 34.3% for the period, and 17.4% in the third quarter. The $1.5-billion small-cap value fund, run by Kenneth Heebner, has 63% of its assets in energy and 34% in materials.

EYES ON THE FED. Energy stocks continue to be the best performers this year, jumping 42.2% through Sept. 30, thanks to surging oil and gas prices. Standard & Poor's Investment Policy Committee and researcher Global Insights forecast West Texas Intermediate crude prices to close 2005 at $65 a barrel, and edge lower to $54 by yearend 2006.

Given high energy prices, Standard & Poor's believes that the Federal Reserve will continue to raise short-term interest rates to fight inflation through January, 2006, ending the rate-tightening cycle at 4.50%.

Earnings from S&P 500 companies also helped boost domestic stock funds' performance. Standard & Poor's Equity Research Services expects earnings to rise 15.1% in the third quarter, and that the 500 companies will continue to post double-digit earnings gains for the fourth quarter and through the first quarter of 2006.

BEST AND WORST. In Standard & Poor's opinion, the market's negative reaction to the hurricanes' effects on consumer sentiment and corporate earnings will prove to be overstated, and U.S. equities will work their way higher in the fourth quarter. Stocks will also be spurred by investors' eventual positive response to the anticipated end of the Fed's rate-tightening policy in early January, 2006. Standard & Poor's end-of-year target for the S&P 500 remains at 1270.

Below is a list of the best- and worst-performing domestic stock funds according to style category at the end of the third quarter 2005 and year-to-date.

Growth Beats Value in Third Quarter

Fund Investment Style

Average Returns Third-Quarter 2005 (%)

Average Returns YTD through 9/30/2005 (%)

Large-Cap Growth

4.5

2.89

Large-Cap Value

3.58

3.92

Large-Cap Blend

3.85

3.1

Mid-Cap Growth

6.12

6.3

Mid-Cap Value

4.67

6.75

Mid-Cap Blend

4.96

6.8

Small-Cap Growth

5.77

4.21

Small-Cap Value

5.01

5.71

Small-Cap Blend

4.81

4.83

All-Cap Growth

6

4.64

All-Cap Value

4.73

5.1

Domestic Equity Funds*

4.63

4.32

S&P 500-Stock Index

3.49

2.65

And here are the funds ranked the highest by BusinessWeek and their 5-year annualized pretax returns through September.

A-List Funds

Fund

Symbol

5-Year Pretax Annualized Return (%)

ABN AMRO Real Estate N

ARFCX

18.6

AIM Energy Inv

FSTEX

15.9

AIM European Small Company A

ESMAX

18.7

AIM Gold & Precious Metals Inv

FGLDX

25.6

AIM International Small Company A

IEGAX

16.5

AIM Real Estate A

IARAX

20.8

AXP Precious Metals A

INPMX

23.8

Adelante US Real Estate Securities Y

LLUYX

18.7

Aegis Value

AVALX

18.0

AllianceBernstein Real Est Invstmnt A

AREAX

18.4

AllianceBernstein Real Est Invstmnt Instl I

ARIIX

18.3

Allianz NFJ Small Cap Value A

PCVAX

19.1

Alpine International Real Estate Equity Y

EGLRX

21.0

Alpine Realty Income & Growth Y

AIGYX

20.5

Alpine US Real Estate Equity Y

EUEYX

29.1

Amer Beacon Emerging Market Instl

AEMFX

15.3

Amer Beacon Small Cap Value PlanAhead

AVPAX

20.3

Amer Century Global Gold Inv

BGEIX

28.5

Amer Century Real Estate Inv

REACX

19.8

Amer Century Sm Cap Vl Inv

ASVIX

18.7

Amer Century Sm Company Inv

ASQIX

16.1

Artisan Small Cap Value

ARTVX

17.6

Berwyn

BERWX

21.3

BlackRock Global Resources Inv A

SSGRX

33.1

Boston Company International Small Cap

SDISX

17.4

Boston Company Small Cap Value

STSVX

17.3

Brazos Real Estate Securities Y

BJRSX

17.6

Bridgeway Micro Cap Limited

BRMCX

17.8

Bridgeway Ultra Small Company

BRUSX

25.2

Bridgeway Ultra Small Company Market

BRSIX

20.3

Bruce

BRUFX

33.7

Burnham Financial Serv A

BURKX

20.7

CGM Focus

CGMFX

34.5

CGM Realty

CGMRX

28.2

CRM Mid Cap Value Inv

CRMMX

15.7

Century Small Cap Select Instl

CSMCX

15.3

Cohen & Steers Realty Focus Instl

CSSPX

22.3

Cohen & Steers Realty Income C

CSCIX

17.3

Cohen & Steers Realty Shares

CSRSX

19.3

Cohen & Steers Reatly Shares Instl

CSRIX

19.4

Columbia Real Estate Equity Z

CREEX

16.0

Commonwealth New Zealand

CNZLX

17.9

Consulting Grp Cap Mkts SmCp Vl Eq

TSVUX

15.4

Davis Real Estate A

RPFRX

18.7

Delafield

DEFIX

18.5

Delaware Emerging Markets A

DEMAX

21.7

Delaware Real Estate Inv Tr A

DPREX

17.3

Delaware Small Cap Core A

DCCAX

16.4

Diamond Hill Bank & Financial A

BANCX

20.2

Dreyfus Premier Emerging Markets A

DRFMX

18.0

EII Realty Securities Instl

EIIRX

16.9

Eastern European Equity A

VEEEX

24.6

Eaton Vance Asian Small Companies A

EVASX

17.2

Eaton Vance Greater India A

ETGIX

18.8

Evergreen Precious Metals A

EKWAX

33.2

Excelsior Emerging Markets

UMEMX

15.8

Excelsior Engy & Natrl Resources

UMESX

15.9

Excelsior Real Estate

UMREX

18.1

FBR Small Cap

FBRVX

18.5

FBR Small Cap Financial

FBRSX

20.3

FMC Strategic Value

17.6

Fairholme

FAIRX

15.1

Fidelity Advisor Latin America A

FLTAX

16.5

Fidelity Latin America

FLATX

18.1

Fidelity Low Priced Stock

FLPSX

18.2

Fidelity Real Estate Investment

FRESX

19.3

Fidelity Select Chemicals

FSCHX

16.2

Fidelity Select Construction & Housing

FSHOX

21.0

Fidelity Select Energy

FSENX

15.0

Fidelity Select Gold

FSAGX

24.7

Fidelity Select Industrial Materials

FSDPX

18.4

Fidelity Select Medical Delivery

FSHCX

19.8

Fidelity Select Natural Gas

FSNGX

15.3

Fidelity Value

FDVLX

15.3

Fifth Third Micro Cap Value Instl

MXAIX

18.6

First American Real Estate Securities Y

FARCX

19.7

First Eagle Global A

SGENX

18.0

First Eagle Gold A

SGGDX

31.4

First Eagle Overseas A

SGOVX

18.3

Forward Emerald Select Banking & Finance A

HSSAX

20.6

Forward Uniplan Real Estate Investment

FFREX

16.2

Franklin Gold & Precious Metals A

FKRCX

23.9

Franklin MicroCap Value

FRMCX

20.0

Franklin Real Estate Sec A

FREEX

17.7

GMO Emerging Markets Quality III

GMASX

19.9

Gabelli Gold AAA

GOLDX

30.9

Goldman Sachs Real Estate Sec A

GREAX

18.5

Hansberger Emerging Markets

HEMGX

15.0

Harding Loevner Emerging Markets

HLEMX

17.7

Heartland Select Value

HRSVX

15.0

Heartland Value

HRTVX

16.9

Heartland Value Plus

HRVIX

15.4

Heitman REIT PBHG

PBRTX

18.6

Hilliard Lyons Senbanc

SENBX

16.4

Hotchkis & Wiley Mid-Cap Value I

HWMIX

20.2

Hotchkis & Wiley Small Cap Value I

HWSIX

26.9

ICON Energy

ICENX

22.9

ING Precious Metals

LEXMX

26.1

ING Russia A

LETRX

38.0

Ivy Global Natural Res A

IGNAX

23.7

Ivy Real Estate Securities A

IRSAX

19.2

J Hancock Real Estate A

JREAX

17.5

JPMorgan Small Cap Value Sel

PSOPX

17.5

JPMorgan US Real Estate A

SUSIX

17.9

James Advantage Small Cap

JASCX

17.1

Janus Mid Cap Value Inv

JMCVX

15.5

Jennison Natural Resources A

PGNAX

24.3

Keeley Small Cap Value

KSCVX

18.7

Kensington Strategic Realty A

KSRAX

18.3

Kinetics Paradigm

WWNPX

17.9

Kinetics Small Cap Opportunity

KSCOX

15.4

Laudus Rosenberg Intl Sm Cap Inv

RISIX

15.0

Lazard Emerging Markets Open

LZOEX

17.5

Legg Mason Eq Tr US Small Cap Vl Prim

LMSVX

16.0

Lord Abbett Small Cap Value A

LRSCX

16.7

MFS Emerging Markets Equity A

MEMAX

16.2

MainStay Small Cap Opportunity I

MOPIX

17.5

Managers Real Estate Securities

MRESX

17.4

Matthews Asian Growth & Income

MACSX

19.0

Matthews Korea

MAKOX

25.2

Merrill Lynch Latin America C

MCLTX

18.2

Merrill Lynch Natural Resources A

MDGRX

21.5

Midas

MIDSX

23.6

Morgan Stanley Instl Intl Real Estate A

MSUAX

23.2

Morgan Stanley Instl US Real Estate A

MSUSX

19.2

Morgan Stanley Real Estate B

REFBX

17.7

Munder Real Estate Eq Invmnt A

MURAX

17.8

Munder Small Cap Value A

MNVAX

18.9

Neuberger Berman Genesis Inv

NBGNX

17.0

OCM Gold

OCMGX

28.8

Oakmark Global I

OAKGX

18.6

Oakmark International Small Cap I

OAKEX

18.9

Oppenheimer Developing Markets A

ODMAX

19.7

Oppenheimer Gold & Special Minerals A

OPGSX

26.0

Pacific Capital Small Cap Y

PSCYX

20.6

Perritt Micro Cap Opportunities

PRCGX

18.8

Phoenix Real Estate Sec A

PHRAX

19.7

Pioneer Real Estate Shares A

PWREX

18.1

Polaris Global Value Investor

PGVFX

16.2

ProFunds Real Estate Ultrasector Inv

REPIX

18.9

Quant Emerging Markets Ord

QFFOX

19.3

Quant Foreign Value Ord

QFVOX

15.6

RS Global Natural Resources

RSNRX

26.9

RS Partners

RSPFX

24.3

RS Value

RSVAX

16.5

Robeco Boston Partners Sm Cap Val II Inv

BPSCX

20.4

Royce Pennsylvania Mutual Inv

PENNX

15.2

Royce Special Equity

RYSEX

17.9

Russell Real Estate Securities S

RRESX

18.7

Rydex Precious Metals

RYPMX

19.0

STI Classic Small Cap Value Equity C

STCEX

18.4

Schneider Small Cap Value

SCMVX

24.4

Scudder Gold & Precious Metals S

SCGDX

30.7

Scudder Latin America S

SLAFX

17.7

Scudder Small Company Value S

SCSUX

15.3

Spirit of America Real Estate A

SOAAX

18.9

Strategic Partners Real Estate Securities A

PURAX

22.3

Strategic Partners Sm Cap Value C

PZVCX

19.0

Stratton Monthly Dividend REIT

STMDX

17.4

Stratton Small Cap Value

STSCX

17.8

T Rowe Price Emerging Europe & Mediterranean

TREMX

21.4

T Rowe Price Latin America

PRLAX

20.1

T Rowe Price Mid-Cap Value

TRMCX

15.3

T Rowe Price New Era

PRNEX

16.5

T Rowe Price Real Estate

TRREX

19.5

T Rowe Price Small Cap Value

PRSVX

17.7

TAMARACK Enterprise S

TETSX

17.1

TAMARACK Microcap Value S

TMVSX

15.0

Templeton China World A

TCWAX

18.4

Templeton Instl Emerging Markets

TEEMX

15.8

Texas Capital Value & Growth

TCVGX

18.6

Third Avenue Real Estate Value

TAREX

19.9

Third Millennium Russia

TMRFX

32.0

Tocqueville Gold

TGLDX

31.1

US Global Accolade Eastern European

EUROX

37.9

US Global Inv Global Resources

PSPFX

32.4

US Global Inv Gold Shares

USERX

29.4

US Global Inv World Prec Minerals

UNWPX

33.1

USAA Precious Metals & Minerals

USAGX

33.2

Undiscovered Managers REIT Instl

URTLX

19.4

Van Eck Global Hard Assets A

GHAAX

20.0

Van Eck Intl Investors Gold A

INIVX

29.1

Van Kampen Real Estate Securities A

ACREX

18.2

Vanguard Energy Inv

VGENX

22.7

Vanguard Precious Metals

VGPMX

32.5

Vanguard REIT Index

VGSIX

18.7

Wasatch Micro Cap

WMICX

19.1

Wasatch Small Cap Value

WMCVX

16.3

Wells Fargo Advtg Small Cap Value Z

SSMVX

19.2

Wells S&P REIT Index A

WSPAX

18.1

Westwood Income AAA

WESRX

17.6

Wilshire Target Small Co Vl Inv

DTSVX

16.4

Yacktman

YACKX

16.5

Yacktman Focused

YAFFX

15.7

iShares DJ US Real Estate Index

IYR

17.4

iShares MSCI Australia Index

EWA

18.5

iShares MSCI Austria Index

EWO

29.9

iShares MSCI Brazil Index

EWZ

15.8

iShares MSCI Mexico Index

EWW

18.4

iShares MSCI South Korea Index

EWY

19.8

n/i numeric investors Small Cap Value

NISVX

23.5

streetTRACKS DJ US Small Cap Value Index

DSV

16.0

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


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