After galloping out of the gate in the first month of the new year, domestic stocks and equity funds cooled down in February. In addition to high energy prices and geopolitical tensions in oil-rich Iran and Nigeria, investors appear concerned about the direction the U.S. Federal Reserve will take on interest rates in March, when Benjamin Bernanke chairs his first meeting later in the month.
All mutual fund-style categories were essentially flat in February, with domestic stock funds slipping 0.46% on average. Large-cap value funds held up best, edging up 0.15% for the month, while midcap growth vehicles showed the worst returns, falling 0.95%.
Returns from the start of the year, however, are impressive: The average domestic equity fund has risen 4.27% year-to-date, while small-cap growth funds have climbed 7.78%, topping all style categories. The large-cap S&P 500 stock index rose just 0.27% in February, but is up 2.93% through the first two months of 2006. (For complete results of more than 5,000 funds, see BW Online's Interactive Mutual Fund Scoreboard).