Reflecting a stock market that turned negative amidst rising energy prices in August, the average domestic equity fund retreated 0.9% for the month, versus a 1.1% loss for the Standard & Poor’s 500 Index.
All domestic equity style categories ended August in negative territory. Small-cap growth funds ranked last, losing on average 1.4%, while all-cap value portfolios showed the narrowest decline, edging down 0.4%. Value-oriented funds suffered slightly less than their growth counterparts, declining 0.7%, versus a loss of 0.9% for growth funds. However, year-to-date, all style categories are in the black, with the mid-cap value showing the best performance (up 6.4%).
August’s top-performing individual equity fund, the $62-million Scudder Commodity Securities Fund/A (SKNRX), soared 9.2%. This fund invests in both the commodities markets directly (through the use of GSCI-linked notes, as well as derivative instruments) and in the stocks of companies that find, develop, or produce commodities. Launched in February of this year, the fund is managed by Theresa Gusman, Terence P. Brennan, and Jeffrey Saeger of Deutsche Asset Management.
As of June 30, the Scudder fund had 56% of its assets invested in energy and 42% in materials. The top five holdings comprised Exxon Mobil (XOM), 4.4%; Dow Chemical (DOW), 2.3%; Shell Transport & Trading Co. PLC, 2.2%; BP p.l.c. (BP), 2.2%; and Chevron Corp. (CVX), 2.0%.
While the energy sector flourishes amidst historic high crude oil prices, the remaining parts of the market are worried about the impact of these high prices on overall economic growth. Indeed, aside from the booming energy sector, all of the S&P 500 GICS Sectors posted broad losses for the month, with materials (-5.3%), telecommunication services (-4.8%), and consumer discretionary (-4.2%), incurring the biggest declines.
At the very end of the month, hurricane Katrina pounded the Gulf of Mexico coast with devastating force, causing catastrophic damage and thousands of estimated deaths in Louisiana, Mississippi and Alabama. The Insurance Information Institute estimates that claims arising from the hurricane could top $25 billion, potentially making it the costliest storm in U.S. history.