Some Springtime Lift for Funds

April results show that international funds were the best bet in equities, while high-risk bond funds beat their safer peers

By Amey Stone

Cheering in the streets of Baghdad in early April didn't trigger the immediate sharp stock market rally that many pros expected. But as investors gained confidence that the end of armed conflict with Iraq would boost the economy and as first-quarter corporate earnings started coming in better than expected, the market marched steadily higher in April. For the month, the average diversified equity fund climbed a healthy 7.7% and the S&P 500 jumped an even higher 8.2% (see BW Online, Interactive Mutual Fund Scoreboard).

Thanks to some cooling of the overheated geopolitical climate, a mixture of international funds turned in the month's strongest results. Foreign funds gained 9.4%, with Europe funds gaining 13.1% and Latin America funds rising a heady 16.2% on average. April's top-performing category, Latin funds, were also helped by an improving economic outlook in Brazil.

One standout fund investing abroad was Dessauer Global Equity (DGLEX ), which gained a stellar 24.1. Exchange-traded funds that invest in Germany (EWG ), Brazil (EWZ ), and Sweden (EWD ) were also top performers, gaining 23.5%, 21.1%, and 20.8%, respectively.


  Financial funds gained 10.5% in April as stocks of large money-center banks and diversified global financial-services firms that are expected to do well as the economy recovers recouped some of the prior year's losses. Insurance stocks also fared well, boosting the group. Enterprise Global Financial Services (EGFAX ) was the top financial performer, gaining 15.8%.

Riskier technology and communications funds benefited from hopes for a rebound in capital spending by corporations, climbing 10.1% and 9.8%, respectively. Firsthand Global Technology (GTFQX ) was in the right place at the right time this month and gained 19%. Semiconductors were a particularly strong subsector of technology. ProFunds Semiconductor UltraSector (SMPIX ) gained 20.3% in April.

Precious metals was the only fund category to post negative returns in April, and even then, that was a scant 0.4% lower. The total return for the volatile metals group is now flat for the past 12 months. But the group's three-year average annual return is 21%.


  Other fund categories with defensive characteristics also failed to shine in April. Natural-resources funds climbed only 1% on average, while real-estate funds were up 4.3%. Funds that invest in Asia were hurt by fears of SARS (severe acute respiratory syndrome) and posted gains only in the 0.5% to 0.3% range.

Bond funds gained an average of just 1.2% in the month. But the top-performing (and riskiest) fixed-income fund categories did far better. Emerging markets gained 6.4%, and convertibles rose 4.7% in April. High-yield funds were another standout, climbing 4.5%.

Ultrashort bond funds, which offer low risk and low returns, gained only 0.1%, posting the worst fixed-income returns of any fund category in April (although their 12-month total return is 2.6%, which beats the great majority of equity funds). Short-term bond funds gained only 0.3%.

Bond-fund returns of less than 1% may seem unexciting, but with plenty of global risks and economic worries lingering, a tilt toward safety probably still makes good sense for most fund investors.

Edited by Patricia O'Connell

A-rated equity funds for April:

ABN AMRO Real Estate N

AIM Global Health Care A

ARK Small Cap Equity A

Al Frank

Amer Century Equity Inc Inv

Amer Century Real Estate Inv


Ariel Appreciation

Armada Small Cap Value I

Artisan Mid Cap

Artisan Small Cap Value

BNY Hamilton Sm Cap Gr Inv

Baron Growth

Bjurman Barry Micro Cap Growth

BlackRock International Opportunities Inv A

Brazos Micro Cap Y

Bridgeway Aggressive Investors 1

Bridgeway Ultra Small Company

Bridgeway Ultra Small Company Tax Adv


Buffalo Small Cap

CGM Focus

CGM Realty

Calamos Growth A


Cohen & Steers Equity Income C

Columbia Real Estate Equity Z

Commonwealth New Zealand

Conseco Equity Y

Delaware RE Inv Tr A

Dodge & Cox Balanced

Dodge & Cox Stock

Driehaus Asia Pacific Growth

Eaton Vance Wldwd Hlth Sciences A

Emerald Select Banking & Finance A

Excelsior Real Estate

Exeter Pro Blend Conservative Term A

F Russell Real Estate Securities S

FBR Small Cap Financial A

FBR Small Cap Value A

FMC Select

FMI Common Stock

FMI Focus

Fenimore Equity Income

Fidelity Advisor Mid Cap T

Fidelity Export & Multinational

Fidelity Japan Small Co

Fidelity Low Priced Stock

Fidelity New Millennium

Fidelity Real Estate Investment

Fidelity Select Biotechnology

Fidelity Select Insurance

Fidelity Select Medical Systems & Equipment

Fidelity Select Software & Computer

Fifth Third Micro Cap Value Instl

Fifth Third Strategic Income Instl

First American Real Estate Securities Y

First American Small Cap Growth Opport Y

First Eagle Global A

First Eagle Gold

First Eagle Overseas A

First Investors Multi-State Ins Tax Free NC A

Franklin Biotechnology Discovery A

Fremont US Micro Cap

Fremont US Micro Cap Instl

Gabelli ABC

Gabelli Gold

Gabelli Westwood Realty AAA

Hartford Mid Cap A

Hennessy Cornerstone Growth

Heritage Mid Cap Stock A

Hotchkis & Wiley Mid-Cap Value I

ICON Energy

ICON Healthcare

ICON Information Technology

ICON Leisure and Consumer

IMS Capital Value

INVESCO Leisure Inv

JPMorgan Mid Cap Value I

Janus Adviser Balanced I

Janus Balanced

Janus Small Cap Value Inv


Julius Baer International Equity A

Kinetics Internet

Legg Mason Eq Tr Special Invmnt Prim

Leuthold Core Investment

Liberty Acorn Z

Longleaf Partners

Lord Abbett Mid Cap Value A

MFS International New Discovery A

MFS Strategic Value A

Mairs & Power Growth

Marshall Mid Cap Value Inv

Matrix Advisors Value

Matthews Asian Growth & Income

Matthews Korea

Matthews Pacific Tiger


Meridian Growth

Meridian Value

Merrill Lynch Global Small Cap B

Merrill Lynch Healthcare B

Montgomery Partners Long Short Eqty Plus R

Morgan Stanley Health Sciences Trust B

Morgan Stanley Instl Small Company Gr B

Morgan Stanley Instl US Real Estate A

Mosaic Equity Tr Mid Cap

Mutual European Z

Mutual Financial Services A

Navellier Perf Mid Cap Growth

Needham Growth

Neuberger Berman Genesis Inv

OCM Gold

Oakmark Equity & Income I

b Oakmark International Small Cap I

Olstein Financial Alert C


PBHG Mid Cap

PIMCO RCM Biotechnology D

PIMCO RCM Global Healthcare D

Parnassus Income Equity Income

Perkins Discovery


Phoenix-Duff & Phelps Real Estate Sec A

Principal Real Estate A

Prudent Bear

Prudential Natural Resources A

Quaker Aggressive Growth A

Reserve Private Eqty Small Cap Growth R

Rockland Small Cap Growth

Royce Low Priced Stock

Royce Opportunity Inv

Royce Premier

Royce Total Return

Royce Trust & Giftshares Inv

Rydex BioTechnology Inv

Santa Barbara Bender Growth C

Schroder Capital Ultra Inv

Scudder Health Care S

Scudder Micro Cap Invest

Security Capital US Real Estate

Security Mid Cap Value A

Sentinel Small Company A

Smith Barney Aggressive Growth A

Spirit of America Real Estate A

Stratton Monthly Dividend REIT

Strong Advisor Small Cap Value Z

T Rowe Price Capital Appreciation

T Rowe Price Health Sciences

T Rowe Price Real Estate

TCW Galileo Value Opportunities I

Thompson Plumb Balanced

Thompson Plumb Growth

Touchstone Emerging Growth A

Transamerica Premier Growth Oppt Inv

Turner Micro Cap Growth

USAA Precious Metals & Minerals

Undiscovered Managers REIT Instl

Value Line Emerging Opportunities

Vanguard Capital Opportunity

Vanguard Health Care

Vanguard LifeStrategy Income

Vanguard Precious Metals

Vanguard REIT Index

Vanguard Wellesley Income Inv

WM West Coast Equity A

Waddell & Reed Adv Science & Technology A

Wasatch Core Growth

Wasatch Micro Cap

Wasatch Small Cap Growth

Wasatch Small Cap Value

Wasatch Ultra Growth

Weitz Partners Value

Weitz Value

Westport R

Westport Select Cap R

Stone is an associate editor of BusinessWeek Online and covers the markets as a Street Wise columnist and mutual funds in her Mutual Funds Maven column

Edited by Patricia O'Connell

Before it's here, it's on the Bloomberg Terminal.