A black cloud hovered over U.S. stock funds in April. The average domestic equity fund lost 3.43% for the month, continuing on a negative trend, and the Standard & Poor's 500-stock index fell 2.0%.
All fund style categories faired poorly in April, ending the month in the red. Large-cap value funds lost the least, falling 2.2% on average, while small-cap growth funds were hardest hit, plunging 5.8%. Generally speaking, large-cap stocks outperformed small ones for the period, and value performed 'better' than growth.
Potomac Small-Cap Short Fund (POSSX), a small-cap blend fund, was the best-performing portfolio in April gaining 11.5% by virtue of its short strategy. The small-cap "bear" fund is designed to rise when its benchmark, the Russell 2000, falls. In contrast, Apex Mid Cap Growth Fund (BMCGX), a small-cap growth portfolio, ended the month with the poorest returns. It plunged 9.3% in April.
With economic data continuing to come in weaker than expected during the month, the Federal Reserve's plan to raise rates at a more accelerated pace looks like it may be temporarily on hold. Factors contributing to the market's losses in April were lower-than-expected real GDP in the first quarter amid soaring energy prices and rising rates, as well as lower consumer confidence and sentiment.
Standard & Poor's Investment Policy Committee reduced its mid-year and year-end targets for the S&P 500 and Nasdaq, stating that it now now "sees the '500' ending June at 1190 and December at 1245 (for a full-year advance of 2.7%), while the Nasdaq should close out June and December at 2065 and 2150, respectively, for a full-year decline of 1.2%." Increased risks to equity returns on prospects of a near-term slowdown in real GDP growth were cited by the committee.
Offsetting dim news in April were better-than-expected home sales, which were strong despite a decline in housing starts. Sales of existing homes rose 1.0% in March, while sales of new houses jumped 12.2%. Consumer spending rose 0.6%, while personal income was up 0.5%. Earnings are coming in higher than expected in the first quarter, and operating earnings are expected to rise 11%, the twelfth consecutive double-digit quarter. Also on the plus side for the month, crude oil prices dropped below $50 a barrel, down from a record $57.25 four weeks ago.
Below is a list of the best- and worst-performing domestic stock funds by style category for April 2005.
|Fund Investment Style||Average Returns April 2005 (%)|
|Large Cap Growth||
|Large Cap Value||
|Large Cap Blend||
|Mid Cap Growth||
|Mid Cap Value||
|Mid Cap Blend||
|Small Cap Growth||
|Small Cap Value||
|Small Cap Blend||
|All Cap Growth||
|All Cap Value||
|Domestic Equity Funds*||
|S&P 500-Stock Index||
|Domestic Equity Funds* -- April 2005 Returns||Best Individual Performer||Returns (%)||Worst Individual Performer||Returns (%)|
|Large Cap Growth||ProFunds:UltraShort OTC/Iv (USPIX)||
|Large Cap Value||Principal Equity Income/A (PUTLX)||
|ING Mid Cap Value Fund/C (IMVCX)||
|Large Cap Blend||Rydex Dynam:Inv Dyn Dow/A||
|Rydex Dynam:Lng Dyn Dow/C||
|Mid Cap Growth||FMC Select||
|Navellier Millennium Top 20/A (NTGRX)||
|Mid Cap Value||Homestead Funds Value Fd (HOVLX)||
|CGM Capital Development Fund (LOMCX)||
|Mid Cap Blend||Rydex:Inverse Mid Cap/A||
|ProFunds:UltraMid Cap/Sv (UMPSX)||
|Small Cap Growth||Frontier Funds:Equity Fund Portfolio (FEFPX)||
|Apex Mid Cap Growth Fund (BMCGX)||
|Small Cap Value||CM Advisers Fund (CMAFX)||
|Dreyfus Small Company Value (DSCVX)||
|Small Cap Blend||Potomac Small Cap/Short/Investor (POSSX)||
|Rydex Srs Tr:Mekros Fund/C (RYCMX)||
|All Cap Growth||Wisdom Fund/Instl (WSDIX)||
|Eaton Vance Tax-Managed Multi-Cap Opport/C (ECCPX)||-8.16|
|All Cap Value||Fairholme Fund (FAIRX)||
|Eastern Point Adv Cp Ap/C||-6.92|
*Excluding sector and balanced funds.
Source: Standard & Poor's. Total returns include reinvested dividends. Preliminary data as of 4/29/05.
Contact Bob Keane with questions or comments at: .
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