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Dark quarter for equity funds

No matter how you slice it, the second quarter was a lousy one for equity funds.

Look at the numbers and there's little to crow about when it comes to fund category performance numbers during this past April, May and June. Of the 15 different types of funds that make-up Lipper's U.S. Diversified Equity Funds category, only one showed a positive average return for the second quarter of 2002. It was specialty diversified equity funds and the average fund in that grouping was up 5. 36 percent.

Hardest hit within that flock of 15 were multi-cap growth funds, down on average 17.11 percent. Following them, large-cap growth funds, off an average of 16.32 percent; mid-cap growth funds, down 14.54 percent; and small-cap growth funds, down 14.10 percent.

Move into the Sector Equity Funds category ---there are 8 different fund types in it---and the only plus-side performers were real estate funds. The average performing real estate fund was up 4.97 percent during the second quarter. Hardest hit? Science and technology funds, down on average 28.05 percent and telecommunications funds, off 26.87 percent. That means for the year, those two types of funds get the worst performers award as from 12/31/01 through 6/28/02, the average science and technology fund was down 33.38 percent and the average telecommunication fund, down 39.23 percent.

Slip into Lipper's World Equity Funds group and you'll find 12 different fund categories. Here, three fund types scored flat to positive returns: International small-cap funds on average posted flat, as in 0.00 percent total returns during the second quarter; the average Japanese Fund was up 3.83 percent; and the average gold fund ahead 11.06 percent. Gold funds is still this year's big winning fund type with year-to-date total returns averaging 50.46 percent. And, Latin American funds, posted this groupings biggest quarterly losses--- down 19.37 percent.

Tally all the equity fund performance numbers up and you'll find the average stock fund was down 10.84 percent for the quarter; off 9,76 percent year-to-date.

Throw in some fixed-income, under the Mixed Equity Funds category, and all of the six different types of funds making it up were underwater for the quarter an average of 6.23 percent.

The only bright performance spots over the past 12-weeks were in the Domestic Long-term Fixed-Income Funds category. Of the Lipper 2,299 funds that Lipper tracks there, the average fund was up 1.31 percent. And, hip-hip hooray's go to World Income Funds. The average fund of that type was up 2.76 percent.

It's real easy to get confused between fund types and categories so to help you differential between who-makes-up-what, here's a breakdown of the types of funds that Lipper tracks and which category each falls under . The number of funds tracked in each fund type, as of 6/28/02, is shown in parenthesis.

U.S. Diversified Equity Funds. The 15 different fund types that fall under this category include: Large-cap growth funds (816); large-cap core funds, (887); large-cap value funds ( 371); multi-cap growth funds (431); multi-cap core funds (424); multi-cap value funds (542); mid-cap growth funds (524); mid-cap core funds (244); mid-cap value funds (220); small-cap growth funds (446); small-cap core funds (334); small-cap value funds (321); S & P 500 funds (179); equity income funds (209); and specialty diversified equity funds (64).

Sector Equity Funds. Included here are eight different fund types: Health/biotechnology funds (197); natural resources funds (79); science & technology funds (407); telecommunications funds (50); utility funds (96); financial services funds (127); real estate funds (157); and specialty/miscellaneous funds (82).

World Equity Funds. Twelve different funds are included in this category. They are: Gold oriented funds (41); global funds (336); global small-cap funds (43); international funds (829); international small-cap funds (101); European region funds, (195); Pacific region funds (68); Japanese funds (56); Pacific-Ex Japan, (70); China region funds (23); emerging markets funds (206); and Latin American funds, (33).

Mixed Equity Funds. Here six fund types are included: Flexible portfolio funds (289); global flexible portfolio funds (98); balanced funds (516); balanced target maturity funds (12); convertible securities funds (76); and income funds (115).

For definitions of each fund type, look for the Lipper Equity Funds Performance Book in your library's reference section.


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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