Mutual Funds Now?
By Dian Vujovich
After a terrific performance year in 2009, will mutual funds continue on their performance run?
The answer is: It all depends upon the market.
In 2009, equity funds were up 33.73 percent, according to Lipper. That’s their heftiest one-year return since 2003. It was in 1967, however, that they posted their best one-year returns: The average return on stock funds that year was up 35.66 percent.
In ’09, the top performing fund group of the 79 equity headings in Lipper’s universe were Latin American funds. The average fund gaining over 113 percent. That’s a big chimichanga.
On the other hand, the one and only equity classification that wound up in the tank were Dedicated Short-Bias funds. The average one here, down 41.33 percent.
All of the top five performing equity funds of ’09 were up over 200 percent. Holy mackerel! They were the Oceanstone Fund, up 264.38 percent; Direxion: Tech Bull 3x fund, up 240.36 percent; DB BasMtis Double Long ETN, up 232.47 percent; ProFund: UtraLatin:Inve, up227.17 percent; and Direxion:EmgMk Bull 3x, up 207.45.
Weird names, huh. A couple sound more like beers than investments.
More importantly, the only fund of those five with any proven legs is the Oceanstone Fund. It has been the top-performing equity fund over the past 3 years.
That isn’t how it typically goes with top-performing funds—really top-performing ones. Usually they are hot for one year and fall down the charts the next.
Other equity fund performance notes:
• World Equity funds continuing performing well. The average fund was up 42.38 percent— their strongest return in the past positive seven years.
• Sector Equity funds gained on average 35.35 percent.
• And Mixed-Equity Funds, up 25.23 percent.
Move into fixed-income and the place to be invested was in High Current Yield Funds. Of course high-yielding anything is considered risky but risk can pay off. The average mutual fund in this fixed-income category ended the year up 46.41 percent.
Makes you sort of wonder why bother being ultra-safe. After all, General U.S. Treasury Funds finished 2009 down 6.47 percent.
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