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Returns Down But Not Out

The numbers are in and despite of a few rallies, the average U.S stock fund lost money during the first quarter of 2003.

During the month of March the average diversified US stock fund gained almost one percentage point, ( 0.92 percent). Add that score with those of the previous two months, however, and you'll find the average fund down 3.3 percent during the first quarter, according to Lipper.

Look for the best quarterly returns under various stock fund headings, and you'll find that Multicap Growth funds were off the least, down 0.73 percent, followed by Large-Cap Growth funds, off 1.11 percent and then Specialty Diversified funds, down, on average, 1.28 percent over that same time period.

In the sector fund arena it was Health and Biotechnology funds that lead the way. Funds in that category were up, on average 1.17 percent. Next in line were Real Estate funds---they moved ahead 1.08 percent during the quarter.

Biggest losing categories in the diversified US stock fund grouping included Small-Cap Value funds, down 5.96 percent for the quarter; Equity Income funds, down on average 5.18 percent; and Large-Cap Value funds, off 5.13 percent.

World Stock funds showed poorly with Gold Oriented funds losing much of their luster---the average fund in that group was down 12.12 percent. Next, European Region fund were down over 9 percent and International Funds, off 7.96 percent.

For plus-side quarterly returns, you had to move to bond funds where the average Taxable Bond Fund was up 2.08 percent. World Bond Funds, scored the highest---up 4.31 percent on average.

Name droppers might like to know that the Amerindo: Technology D shares fund was the best performing fund during the first quarter. It was up 24.43 percent. Behind it, the Polynous Growth Fund, up 21.27 percent and ProFunds: Internet Fund, ahead 14.16 percent.

The first quarter's worst three performing funds were ProFunds:Telecom Fund, down 23.47 percent; Fidelity's Korea Fund, off 20.13 percent; and ProFunds: Precious Metals Funds, off 20.03 percent.So what's it all mean?

According to Don Cassidy, a senior analyst at Lipper, "The first quarter was driven by big moves in individual big stocks. That's what moved technology and what made the health and bio techs look good."

Cassidy pointed out that individual stock names like Johnson & Johnson and Amgen helped health and bio tech funds move ahead. He added that companies like Intel and Ebay helped pump up some of the technology funds' performances.

Although growth funds outperformed value funds, and large-cap stocks did better than the small-cap, Cassidy felt that the move to large-caps was largely a retreat to "the perceived safety of large company" investing.

"But on the growth or value subject, we really don't think that people were saying, yah, let's go run after the growth stocks again. As I said earlier, it was the individual stocks that did well."

While the first quarter did not show any significant trends developing, given the concerns about the war in Iraq, funds really didn't perform all that poorly. "It was a quarter that was down, but not disastrous, " says Cassidy.


Dian Vujovich is a nationally syndicated mutual fund columnist, author of a number of books including Straight Talk About Mutual Funds (McGraw-Hill), and publisher of this web site.

To read more articles, please visit the column archive.

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