A black cloud hovered over U.S. stock funds in April. The average domestic equity fund lost 3.43% for the month, continuing on a negative trend, and the Standard & Poor's 500-stock index fell 2.0%.
All fund style categories faired poorly in April, ending the month in the red. Large-cap value funds lost the least, falling 2.2% on average, while small-cap growth funds were hardest hit, plunging 5.8%. Generally speaking, large-cap stocks outperformed small ones for the period, and value performed 'better' than growth.
Potomac Small-Cap Short Fund (POSSX), a small-cap blend fund, was the best-performing portfolio in April gaining 11.5% by virtue of its short strategy. The small-cap "bear" fund is designed to rise when its benchmark, the Russell 2000, falls. In contrast, Apex Mid Cap Growth Fund (BMCGX), a small-cap growth portfolio, ended the month with the poorest returns. It plunged 9.3% in April.
With economic data continuing to come in weaker than expected during the month, the Federal Reserve's plan to raise rates at a more accelerated pace looks like it may be temporarily on hold. Factors contributing to the market's losses in April were lower-than-expected real GDP in the first quarter amid soaring energy prices and rising rates, as well as lower consumer confidence and sentiment.
Standard & Poor's Investment Policy Committee reduced its mid-year and year-end targets for the S&P 500 and Nasdaq, stating that it now now "sees the '500′ ending June at 1190 and December at 1245 (for a full-year advance of 2.7%), while the Nasdaq should close out June and December at 2065 and 2150, respectively, for a full-year decline of 1.2%." Increased risks to equity returns on prospects of a near-term slowdown in real GDP growth were cited by the committee.
Offsetting dim news in April were better-than-expected home sales, which were strong despite a decline in housing starts. Sales of existing homes rose 1.0% in March, while sales of new houses jumped 12.2%. Consumer spending rose 0.6%, while personal income was up 0.5%. Earnings are coming in higher than expected in the first quarter, and operating earnings are expected to rise 11%, the twelfth consecutive double-digit quarter. Also on the plus side for the month, crude oil prices dropped below $50 a barrel, down from a record $57.25 four weeks ago.
Below is a list of the best- and worst-performing domestic stock funds by style category for April 2005.
| Fund Investment Style | Average Returns April 2005 (%) |
| Large Cap Growth | -2.44 |
| Large Cap Value | -2.19 |
| Large Cap Blend | -2.20 |
| Mid Cap Growth | -4.52 |
| Mid Cap Value | -4.06 |
| Mid Cap Blend | -4.07 |
| Small Cap Growth | -5.77 |
| Small Cap Value | -5.24 |
| Small Cap Blend | -5.02 |
| All Cap Growth | -3.44 |
| All Cap Value | -3.23 |
| Domestic Equity Funds* | -3.43 |
| S&P 500-Stock Index | -2.00 |
| Domestic Equity Funds* — April 2005 Returns | Best Individual Performer | Returns (%) | Worst Individual Performer | Returns (%) |
| Large Cap Growth | ProFunds:UltraShort OTC/Iv (USPIX) | +8.56 | ProFunds:UltraOTC/Sv (UOPSX) | -8.93 |
| Large Cap Value | Principal Equity Income/A (PUTLX) | +1.02 | ING Mid Cap Value Fund/C (IMVCX) | -7.99 |
| Large Cap Blend | Rydex Dynam:Inv Dyn Dow/A | +5.81 | Rydex Dynam:Lng Dyn Dow/C | -6.31 |
| Mid Cap Growth | FMC Select | -1.32 | Navellier Millennium Top 20/A (NTGRX) | -9.25 |
| Mid Cap Value | Homestead Funds Value Fd (HOVLX) | -0.49 | CGM Capital Development Fund (LOMCX) | -9.09 |
| Mid Cap Blend | Rydex:Inverse Mid Cap/A | +4.16 | ProFunds:UltraMid Cap/Sv (UMPSX) | -8.27 |
| Small Cap Growth | Frontier Funds:Equity Fund Portfolio (FEFPX) | +4.17 | Apex Mid Cap Growth Fund (BMCGX) | -9.30 |
| Small Cap Value | CM Advisers Fund (CMAFX) | 0.00 | Dreyfus Small Company Value (DSCVX) | -9.21 |
| Small Cap Blend | Potomac Small Cap/Short/Investor (POSSX) | +11.50 | Rydex Srs Tr:Mekros Fund/C (RYCMX) | -8.65 |
| All Cap Growth | Wisdom Fund/Instl (WSDIX) | -0.39 | Eaton Vance Tax-Managed Multi-Cap Opport/C (ECCPX) | -8.16 |
| All Cap Value | Fairholme Fund (FAIRX) | 0.00 | Eastern Point Adv Cp Ap/C | -6.92 |
*Excluding sector and balanced funds.
Source: Standard & Poor's. Total returns include reinvested dividends. Preliminary data as of 4/29/05.
Contact Bob Keane with questions or comments at: .
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