April Showers Bring Soggy Returns

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)


ProFunds:UltraOTC/Sv (UOPSX)


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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