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Portfolio > Mutual Funds > Equity Funds

Taking Baby Steps in April

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The market finished higher in April, but not before taking a tumble in the middle of the month as oil prices surged.

After reaching a low on April 17, the S&P 500 bounced back three days later and finished the month with a total return of 1.3%. So far this year, it has risen 5.6% with dividends. The strongest performing sectors in April remained energy, financials, and materials. On the losing end were health care and telecom stocks.

In this context, large- and mid-cap stocks overall plugged along. Concerns about the impact of higher energy and commodity prices on the Federal Reserve’s interest rate decision-making process may have contributed to investors’ embrace of the value side of the style ledger, at least for large- and mid-cap issues.

In March, Standard & Poor’s investment strategist Sam Stovall predicted that small-cap stocks may have reached their pinnacle. While one month does not make a trend, the category lost 0.1% in April as represented by the price change on the S&P SmallCap 600. Still, small-cap stocks in the index have surged 12.5% year-to-date following a robust first quarter advance. In comparison, the S&P MidCap 400 has risen 8.8% for far this year, and the S&P 500 is up 5.0% on a price basis.

In terms of fund categories, large-cap value funds were the standouts for in April, rising 2.1% as dividends helped boost returns. The all-cap value category rose 1.6%, while mid-cap value funds gained 1.3%. Small-cap growth funds were the weakest of the bunch, edging just 0.2%, while small-cap blend funds managed a 0.6% uptick. Small-cap value funds, which have enjoyed strongreturns over the past six years, rose just 0.8% in April.

Standard & Poor’s Global Investment Policy Committee believes that strong earnings, a mid-year end to the Fed’s rate-tightening program, and the reduction in shock value associated with oil trading above $70 per barrel will allow investors to remain optimistic about the price appreciation potential for U.S. equities. The Committee predicts a full-year price advance of 9.0% for the S&P 500.

Fund Investment Style

April 2006 Average Returns (%)*

Large-Cap Growth


Large-Cap Value


Large-Cap Blend


Mid-Cap Growth


Mid-Cap Value


Mid-Cap Blend


Small-Cap Growth


Small-Cap Value


Small-Cap Blend


All-Cap Growth


All-Cap Value


Domestic Equity Funds (excluding sector and balanced funds)


S&P 500-Stock Index


*Source: Standard & Poor’s. Total returns include reinvested dividends. Preliminary data as of 4/30/06.


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