April 9, 2003 — It reads like a who’s who of high-flying funds from 1999: Amerindo Technology Fund/D (ATCHX), up 24.4%, Munder Funds NetNet/A (MNNAX), up 6.8%, Red Oak Technology Select Fund (ROGSX), up 5.1%.
Technology funds, hardest hit among sector funds these past three years, bubbled to the top of the list in the first quarter, while gold funds, which shone brightly last year as the geopolitical landscape deteriorated, sold off once the war in Iraq finally got underway.
Despite the ranks of tech, biotech, and health care funds at the top of the performance charts, sector funds finished down 1.7% on average in the first quarter of 2003, slightly ahead of the Standard & Poor’s 500-stock index, which slipped 3.2%. The Nasdaq, in comparison, eked out a 0.42% gain for the period.
On an overall category basis, real estate funds tracked by Standard & Poor’s held up best, rising 1.2% for the quarter, followed by biotech funds, up 1.0% on average, and health care funds, up 0.82%. Funds investing in financials lost 4.9%, while utility funds lost 4.1%. Gold funds, on top last year with an outsized 61.4% gain, were at the bottom of the list, falling 11.8% for the quarter, and underscoring both the metal’s and gold funds’ volatility.
Despite the accelerated comeback of high-beta tech, Internet, and biotech funds, many are coming off extremely low bases, having suffered greatly the past three years with the sell-off in technology stocks starting in March 2000.
For example, RS Investment Trust: Internet Age Fund (RIAFX) a top-five performer among tech funds for the quarter, gaining 7.3%, lost 37.4% on average for the three years ended in March. Amerindo Technology, at the very top of the list, has given up 46.9% on average over the same three-year period.
Investors, burned in the past, may not seem convinced of a tech turnaround just yet, having pulled money out of stock funds both last year and this year. Stocks funds lost a net $11.1 billion in February alone, and $371 million in January, months when investors typically make contributions to defined benefit plans.
Such outflows, combined with a jittery market, uncertain economic growth, and low consumer confidence, doesn’t appear to bode well for a sustained tech rally. To add to the list of woes, many companies have been keeping their purse strings closed, taking a wait-and-see attitude before committing to further capital spending.
Here’s a look at the best- and worst-performing sector funds for the first quarter of 2003 in eight sector categories. While each category had its respective standout, sector fund performance for the three months provided no real, clear themes going forward — not surprising given the economic and geopolitical uncertainty that characterized the period.
Best PerformersFirst Quarter 2003 Returns (%)Worst PerformersFirst Quarter 2003 Returns (%)
- BiotechAmerindo Health & Biotechnology Fund/D (DNADX) +10.8Munder Funds Bio Tech2/B (MBTBX) -9.2
- Energy & Natural ResourcesAIM Global Energy Fund/A (GTNAX) +2.9Saratoga Energy & Basic Materials/B (SPEBX) -6.9
- FinancialsBurnham Financial Services Fund/A (BURKX) +2.4Merrill Lynch Global Financial Svc Fund/B (MBFNX) -10.5
- Health Care/Health SciencesPrudential Health Sciences Fund/A (PHLAX) +8.1AIM Global Health Care Fund/B (GTHBX) -5.6
- Precious MetalsUS Global Investors Fds: World Prec Minerals (UNWPX) -5.8Van Eck Funds: International Investors Gold/A (INIVX) -15.8
- Real EstateCGM Realty Fund (CGMRX) +3.9Security Capital European Real Estate (SEUIX) -9.0
- TechnologyAmerindo Technology Fund/D (ATCHX) +24.4Firsthand Funds:Technology Innovators Fund (TIFQX) -11.1
- UtilitiesMFS Utilities Fund/I (MMUIX) +0.7Liberty Utilities Fund/B (CUTBX) -8.0
SECTOR FUND AVERAGESFirst Quarter 2003 Returns (%) Full-Year 2002 Returns (%)
- Energy & Natural Resources -2.0 -2.0
- Financials-4.9 -11.2
- Health +0.8 -26.3
- Precious Metals-11.8 +61.4
- Real Estate+1.2 +3.7
- Technology-0.7 -42.7
Source: Standard & Poor’s. Total returns are in U.S. dollars and include reinvested dividends. Data as of 3/31/03.