Feb. 10, 2005 — As the New Year began, we marked the one-year anniversary of 36 new funds that completed their first year of operating history at the end of 2004, up nine over the previous year. As a group, they performed in-line with the market, gaining 10.3%.
Dividend Capital Realty Income Fund/A was the best performing new fund in 2004, returning 26.6%, versus an average gain of 31.7% for U.S. real estate funds, and 10.9% for the S&P 500. The portfolio ranked 179 among the entire universe of 202 funds within its peer group.
Following real estate, the next best-performing fund categories were small cap value, which gained 21.7%, and mid cap value, which rose 19.8%. Though small-cap value funds have outperformed over the past four years, only one small-cap value fund was among the new one-year-olds at the end of 2004, down from six in 2003. The category may be ready for a breather after a period of strong gains.
Overall in 2004, newly issued equity funds trumped fixed-income funds, continuing 2003′s positive trend for stocks. Of note, nine of the new funds marking their first full year anniversary at the end of 2004 were in the asset allocation/hybrid category, up from only two such funds in 2003, and zero in 2002. The prominence of new funds in this category for 2004 highlights the convenience sought by investors wishing to diversify their portfolios while balancing risk and return.