Equity funds had three consecutive months of positive returns, their strongest third quarter (+16.79 percent) in over 30 years, according to Tom Roseen, Lipper’s research manager for the United States and Latin America.
“Since the market bottom around March 9, 2009, equity funds rose an almost-unprecedented 65.20 percent, significantly chipping away at the devastating losses witnessed during the recent market carnage,” explains the Denver-based analyst.
For the one-year period ending September 30, though, equity funds remained in the red, down 3.10 percent. Some of the steam was let out of the market during late-September after mixed economic data was released, Roseen says.
On the heels of the big run-up in equities, investors took some money off the table with news about worse-than-expected existing home sales, durable goods orders and new home sales. Then, investors anxiously awaited the third-quarter reporting season, discounting the decline in jobless claims and improving consumer confidence levels.
The CBOE Volatility Index (VIX) fell a bit from the previous quarter-end (26.35) and ended the third quarter at 25.61. In July, investors cheered better-than-expected second quarter earnings, with the vast majority of the companies topping expectations, and the market remained buoyed by encouraging reports on both new and existing home sales for June and a rise in durable goods orders.
During the dog days of summer, investors cautiously bid up equity issues as economic data showed continued signs of improvement: durable goods orders, new home sales, housing prices, and consumer confidence beat consensus estimates in August.
For the quarter the Dow and the Nasdaq posted handsome returns, rising 14.98 percent and 15.66 percent, respectively, and tacking on 2.27 percent and 5.64 percent for the month of September.
Likewise, some 98 percent of all equity and mixed-equity funds posted plus-side returns and all but one of Lipper’s 78 equity classifications posted positive returns. For the month of September, 98 percent of all equity and mixed-equity funds posted returns in the black, with the average equity fund gaining 4.94 percent.
For the quarter, the dollar lost ground against the euro (-3.48%) and the yen (-6.64%) but gained against the pound (+3.00 percent). Commodity prices gained some ground: near-crude oil prices rose a mere 1.02 percent to close the quarter at $70.61 per barrel, and gold added on 8.73 percent to end the quarter at $1,008.00 an ounce.
The equity funds tally for the third quarter looked similar to last quarter’s, with two exceptions: real-estate funds — up 32.53 percent — posted their strongest quarterly return in over 30 years, and diversified-leveraged funds added 32.44 percent to last quarter’s value, taking the number two spot.
For the month of September, Latin American funds (+13.96 percent), gold-oriented funds (+12.25 percent) and emerging-markets funds (+9.12 percent) classifications jumped to the head of the class, and Japanese funds (-2.29 percent) and dedicated short-bias funds (-7.90 percent) declined.