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New Funds Perform In-Line for 2004

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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.

In addition to the nine hybrid funds that turned one year old at the end of 2004, there were 22 equity funds (twenty-one domestic/one global), and five fixed-income funds (three taxable, two tax-exempt). All but one — PF Goldman Sachs Short Duration Bond Fund/A — finished the year in positive territory. The short duration bond fund ranked 340 within the entire universe of 348 funds in its style category following its first year.

Here’s a look at the best- and worst-performing new funds that finished their first full year of performance at the end of 2004. They are all too new to carry a Star ranking from Standard & Poor’s, which requires three years of operating history.


Best Performers Inception Date 2004 Return (%) Worst Performers Inception Date 2004 Return(%)
Dividend Capital Realty Income Fund/A 12/18/03 +26.6 PF Goldman Sachs Short Duration Bond Fund/A (PFASX) 12/31/03 -0.1
Gabelli Small Cap Growth/A (GCASX) 12/31/03 +21.7 ING Principal Protection Fund VIII/A (IAIIX) 12/23/03 +2.3
Fidelity Advisor Value/A (FAVFX) 12/23/03 +19.8 Sit Florida Tax Free Income Fund (SFLIX) 12/31/03 +2.6
Dreyfus Premier Structured Lg Cap Val Fund/A 12/31/03 +16.8 JPMorgan Intm Tax Free Income/A (JITAX) 12/31/03 +3.5
Gabelli Asset/A (GATAX) 12/31/03 +16.5 PIF Preferred Securities/J (PPSJX) 12/29/03 +3.6

Source: Standard & Poor’s. Total returns are in U.S. dollars and include reinvested dividends. Preliminary data as of 12/31/04.

Contact Bob Keane with questions or comments at: [email protected].


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