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Portfolio > Mutual Funds

Few Shine as Market Stars

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According to research firm Lipper and parent company Reuters, large-cap and value-oriented funds stand out as market-beating funds in the third quarter of 2006. Large-cap value funds, of which Lipper tracks some 515, rose 5.38 percent, well ahead of the Dow Jones Industrial Average at 4.74 percent and slightly ahead of the S&P 500 at 5.17 percent. Of 52 fund categories, 42 lagged the performance of the S&P.

Several sector funds are doing well, however, most notably those investing in real estate, utilities and telecommunications — as well as those specializing in financial services.

Of the largest mutual funds, the Vanguard 500 Index, Vanguard Institutional Index and the Vanguard Windsor II funds outperformed the S&P 500 in the third quarter. Several American Funds — such as the company’s Income, Capital Income Builder, Capital World Growth and Income, and Washington Mutual Investors — were up 5.2 percent or more.

In terms of leading funds for the quarter, Matthews India topped the list with a 17.88 percent uptick. ProFunds Pharmaceuticals UltraSector gained 17.34 percent.

Year to date, several China funds have risen 30 percent or more, including Oberweis China Opportunities and the John Hancock Greater China Opportunity Fund. ING Russia grew 36.09 percent, while the U.S. Global Investors Gold Shares has improved by 34.58 percent.


Who Beats the S&P?

In the third quarter, the following fund categories topped the performance of the S&P 500 Composite; most of these 10 fund groups also have outperformed the S&P in the first three quarters of 2006 and over a 10-year period.

Type of fund (# of funds)3Q’06YTD10-Year*

Latin American (19)18.95%18.95%14.59%

Real estate (278)8.35%22.13%15.41%

Utility funds (111)6.26%13.64%10.02%

Pacific ex-Japan (52)5.99%12.65%5.73%

Telecom funds (38)5.94%10.58%7.55%

Global large-cap value (26)5.87%11.49%9.22%

Financial services (130)5.52%9.39%12.23%

S&P 500 index objective (180)5.51%8.12%8.11%

Large-cap value (517)5.38%10.19%8.51%

Emerging markets (227)5.27%12.50%8.17%

S&P 5005.17%7.01%6.87%

*Cumulative total reinvested performance

Source: Reuters, 2006


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