December 29, 2010

Equity Mutual Funds to End 2010 Up More Than 16%, Lipper Reports

In the fourth quarter of 2010, equity funds are up 10.14% on average through Dec. 23.

For 2010, equity funds are likely to end the year up more than 16% on average, according to preliminary Lipper data released Dec. 23. These funds moved up a whopping 33.73% in 2009, after dropping -39.54% in 2008.

Popular equity funds have had a good year, as well. The Vanguard Total Stock Fund (VTSMX, VTI), for instance, is up 17.06% so far in 2010, and the Fidelity Contrafund (FCNTX) has improved 16.96%.

In the fourth quarter of 2010, equity funds are up 10.14% on average through Dec. 23. This follows a 12.52% jump in the third quarter, a drop of -10.42% in the second quarter, and an uptick of 4.64% in the first quarter, Lipper data shows.

In the third quarter, “A late-summer rally catapulted equity funds to their best gain (+12.52%) in five quarters and their strongest September return (+9.63%) since at least 1959,” said Tom Roseen, a Lipper analyst in his October summary.

For the third quarter of 2010, all but one of Lipper's 79 equity fund classifications posted positive returns. At the top of the equity funds leader board were the Latin American funds (+25.93%), diversified leverage funds (+22.61%), and international real estate funds (+22.60%) classifications.

Q4 2010

U.S.-focused equity funds have improved 11.57% this quarter, including small-cap growth funds, which have added 17.23% so far in the fourth quarter of 2010.

The Vanguard Total Stock is up 11.62% in the fourth quarter through Dec. 23, while the Fidelity Contrafund has jumped 9.48%, according to Lipper.

In addition, world equity funds have ticked up 6.57% since Oct. 1. Within this broad category, Japan funds top the list with a gain of 10.77%.

Sector funds have risen 9.67%. This category includes natural resources, up 20.21%; and precious metals, up 11.14%.

Funds focused on U.S. financial services have gained 11.03% this quarter and are on track for a full-year improvement of 11.24%. Global financial-service funds are up 5.68% this quarter and 9.77% for 2010.

The only fund groups with negative returns through Dec. 23 are short-biased funds, down -14.19% for the quarter, and domestic long-term fixed-income funds, which have fallen -0.36% since Oct. 1 but are on track to end the year up close to 7.48%.

For the month through Dec. 23, the roughly 13,000 equity funds tracked by the research group have gained an average of 6.12%.

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