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Portfolio > Mutual Funds > Equity Funds

Second Quarter Not Kind to Funds, Says Lipper

By Janet Levaux

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After a decent first quarter – when U.S. stock markets rose between 3.6-8.9% and many mutual funds showed strong returns, the markets and plenty of funds are back in the red in the second quarter through June 24, according to Lipper’s preliminary data.

The bright spots are precious-metal funds and some bear/leveraged products.

Some of the worst-performing fund categories, Lipper says, are those focused on Europe. This fund group fell 11.6% from March 31 to June 24 and is down close to 11.5% year to date.

Large-cap growth funds have declined 8.2% in the second quarter; they’re down 4.3% for the year.

Precious-metal funds, though, are up close to 12% for the quarter and nearly 13% for the year through June 24.

Income-focused funds dropped 1.7% in the second quarter, but are up 1.1% year to date.

In terms of some of the largest funds and their performance, the PIMCO Total Return Fund is up 2.1% in Q2 and about 5.2% for the first half.

On the down side, American Funds Growth is off 8.2% for the quarter and 4.4% for the year, while Dodge & Cox International Stock has declined 10.3% and 7% for these periods respectively.

The Fidelity Contrafund fell 4.6% from March 31 through June 24 and is down 1.1% for the first half of 2010, according to Lipper data.

On the plus side, funds like the iPath ETN S&P500 VIX, tracking volatility, rose 32% in the second quarter, while the Direxion Monthly Developed Market Bear 2X improved roughly 23%.

As for fixed income, bonds rated AAA are up 2.5% for the quarter and 4.9% for the year, while those with a BBB rating moved up 1.9% and 5.2% in the same periods.

High-current yield products are off 0.4% for Q2 but are up 4.2% for the first half of the year.

In the first quarter of 2010, U.S. diversified equity funds grew 5.55 percent, while world equity funds bumped up 1.7 percent. Mixed equity funds rose 2.43 percent, narrowly beating out world income funds at 2.36 percent.

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