Stocks' Last-Minute Summer Fling

Mutual funds recovered some of their losses as investor optimism kicked in mid-August, while bond portfolios showed steady gains

By Amey Stone

August was a month of downs-and-ups for fund investors. Stocks fell sharply early on, thanks to spiking oil prices and surprisingly weak jobs news. They bounced back midmonth when investors started to think oil prices would fall, summer economic weakness would prove temporary, and stocks were cheap. By the end of the month, the average diversified equity fund was down just 0.7%, while the Standard & Poor's 500 had eked out a 0.4% gain, according to data from S&P. (For complete results of more than 5,000 funds, see BW Online's Interactive Mutual Fund Scoreboard.)

International funds fared far better than domestic, climbing 0.9% on average in August. Funds that focus on emerging markets did the best, gaining 3.7%. Latin America was a bright spot, with funds that invest there jumping 4.2%. Those that invest in the Pacific Rim (not including Japan) gained 2.7%, and Korea sector funds were standouts. For example, Matthews Korea (MAKOX ), up 9.1%, was the fifth-best performing fund of the month. Fidelity Advisor Korea A (FAKAX ) was ranked sixth, with an 8.7% gain.


  Domestic funds that look for value fared better than those that seek earnings growth. Large-cap value portfolios gained 0.7%, while large-cap growth funds fell 0.8%. Funds that invest in smaller stocks were generally hit harder than large-cap funds. In the small-cap arena, growth funds fell 2.9% and value funds slipped 0.6%.

Defensive sectors did the best in August. Real estate gained 7% as the housing boom continued apace and mortgage rates dipped. Precious metals funds climbed 6.5% as gold and other commodities continued to rise. Profunds boasted the top two performing funds overall in August: Precious Metals Ultrasector (PMPIX ) climbed 12.7%, and Real Estate Ultrasector (REPIX ) climbed 12.1%. PIMCO Real Estate Real Return Strategy (PRRSX ) came in third, with an 11.4% gain.

Technology was the worst-performing sector-fund category in August, falling 4.4%. ProFunds Semiconductor Ultrasector (SMPIX ) fared the worst in that sector, tumbling 16.7%. Communications funds fell an average of 1%. The worst performer of that group was Seligman Communications & Information A (SLMCX ), which dropped 5.3%.


  Fixed-income funds delivered strong gains in August, rising 1.6% on average. That was a little weaker than the Lehman Bros. Aggregate Bond Index, which rose 1.9%. The longest-term bond funds fared the best. Long-bond funds climbed 2.6%, and long-term government bond funds climbed 3%. American Century Target Maturity 2030 (ACTAX ) was the best-performing bond fund overall, with a 6.9% gain. Emerging-market bond funds were also standouts, however, climbing 4.3% on average. The best performer in that group was JPMorgan Fleming Emerging Markets Debt (JEMDX ), up 5.2%.

In August, fund investors fared decently taking risk -- as long as they placed their bets overseas. Domestic investors did best if they stayed on the defensive.

  The A-List Funds
Fund 5-Year Annualized Pretax Return (%)
ABN AMRO Mid Cap N 14.9
ABN AMRO Real Estate N 16.5
AIM Real Estate A 19.1
AXP Precious Metals A 16.3
Aegis Value 18.4
Al Frank 17.7
AllianceBernstein Real Est Invstmnt Adv 17.1
AllianceBernstein Real Est Invstmnt Instl I 16.1
Alpine Realty Income & Growth Y 19.7
Alpine US Real Estate Equity Y 23.4
Amer AAdvantage Small Cap Value Instl 16.9
Amer Century Glbl Gold Inv 17.9
Amer Century Real Estate Inv 17.9
Amer Century Sm Cap Vl Inv 17.3
Amer Century Sm Company Inv 14.8
Ariel 13.5
Armada Small Cap Value I 15.5
Artisan Small Cap Value 14.8
Berwyn 13.4
Bjurman Barry Micro Cap Growth 22.6
BlackRock International Opportunities Inv A 15.4
Boston Partners Small Cap Value II Invest 22.2
Brazos Real Estate Securities Y 16.3
Bridgeway Aggressive Investors 1 13.8
Bridgeway Micro Cap Limited 17.0
Bridgeway Ultra Small Company 29.4
Bridgeway Ultra Small Company Market 23.6
Bruce 28.9
Buffalo Small Cap 19.3
Burnham Financial Serv A 27.2
CGM Focus 28.9
CGM Realty 22.6
CRM Small Cap Value Instl 15.6
Calamos Growth A 15.5
Cohen & Steers Equity Income C 16.7
Cohen & Steers Realty Shares 17.8
Cohen & Steers Special Equity 21.7
Columbia Acorn Z 13.1
Columbia Real Estate Equity Z 15.4
Columbia Small Cap Z 13.7
Constellation Clover Small Cap Value I 14.5
Davis Real Estate A 16.4
Delafield 16.2
Delaware RE Inv Tr A 17.1
Diamond Hill Bank & Financial A 16.8
Driehaus International Discovery 14.8
EII Realty Securities Instl 15.5
Eaton Vance Asian Small Companies A 16.6
Emerald Select Banking & Finance A 17.4
Evergreen Precious Metals A 24.3
Excelsior Real Estate 16.4
F Russell Real Estate Securities S 17.7
FBR Small Cap 17.5
FBR Small Cap Financial 21.4
FMC Strategic Value 14.7
FMI Focus 13.2
FMI Sasco Contrarian Value 13.8
Fidelity Canada 14.9
Fidelity Low Priced Stock 16.1
Fidelity Real Estate Investment 18.0
Fidelity Select Construction & Housing 13.7
Fidelity Select Gold 15.9
Fidelity Select Home Finance 14.7
Fidelity Select Medical Delivery 14.2
Fidelity Select Medical Systems & Equipment 15.1
Fifth Third Micro Cap Value Instl 16.8
First American Real Estate Securities Y 18.1
First American Small Cap Growth Opport Y 15.9
First Eagle Global A 15.8
First Eagle Gold A 26.1
First Eagle Overseas A 15.5
Forward Uniplan Real Estate Investment 15.3
Franklin Gold & Precious Metals A 15.8
Franklin Microcap Value 16.6
Franklin Real Estate Sec A 16.5
Fremont Real Estate 14.3
Gabelli Gold AAA 23.7
Gabelli Westwood Realty AAA 16.6
Goldman Sachs Real Estate Sec A 17.4
Goldman Sachs Small Cap Value A 15.2
Harris Insight Small Cap Value N 14.8
Heartland Value 15.9
Heartland Value Plus 13.9
Heitman REIT Adv 16.4
Hennessy Cornerstone Growth 14.8
Hotchkis & Wiley Mid-Cap Value I 20.2
Hotchkis & Wiley Small Cap Value I 21.6
iShares MSCI Austria Index 14.4
ICON Energy 19.7
ICON Financial 13.7
IMS Capital Value 13.7
ING Precious Metals 16.5
ING Russia A 39.0
INVESCO Gold & Precious Metals Inv 16.1
Ivy European Opportunities A 15.8
Ivy Global Natural Res A 16.6
Ivy Real Estate Securities A 17.2
JPMorgan Mid Cap Value I 16.9
Janus Mid Cap Value Inv 17.0
Janus Small Cap Value Inv 13.7
Jennison Health Sciences B 16.2
Jennison Natural Resources A 17.1
Lord Abbett Small Cap Value A 14.8
Matthews Asian Growth & Income 16.3
Meridian Growth 14.9
Meridian Value 15.4
Merrill Lynch Global Small Cap C 13.5
Merrill Lynch Value Opportunities B 13.9
Morgan Stanley Instl US Real Estate A 16.7
Morgan Stanley Real Estate B 15.5
Mosaic Equity Tr Mid Cap 13.8
Munder Real Estate Eq Invmnt B 14.9
Munder Small Cap Value Y 17.1
Neuberger Berman Genesis Inv 15.7
N/I Numeric Investors Small Cap Value 21.1
OCM Gold 20.8
Oakmark Global 15.6
Oakmark Select I 13.2
Oberweis Micro Cap 14.9
One Group Small Cap Value I 16.0
Oppenheimer Developing Markets A 15.6
Oppenheimer Gold & Special Minerals A 16.4
PIMCO PEA Renaissance A 14.4
PIMCO RCM Biotechnology D 14.7
PIMCO RCM Global Healthcare D 13.7
Pacific Capital Small Cap Y 18.0
Perkins Discovery 16.4
Perritt Micro Cap Opportunities 20.0
Phoenix-Duff & Phelps Real Estate Sec A 19.8
Phoenix-Seneca Equity Income A 15.0
Pioneer Real Estate Shares A 16.2
Principal Real Estate Securities A 17.7
RS Global Natural Resources 15.1
RS Partners 22.3
Royce Low Priced Stock 17.0
Royce Micro-Cap Inv 16.0
Royce Opportunity Inv 17.8
Royce Pennsylvania Mutual Inv 13.7
Royce Premier 13.3
Royce Select 15.4
Royce Special Equity 16.0
SAFECO Small Cap Value Inv 14.7
STI Classic Small Cap Value Equity L 13.6
Schroder Capital US Opportunities Inv 14.2
Scudder Gold & Precious Metals S 25.3
Security Capital US Real Estate 17.0
Security Mid Cap Value A 15.0
Sentinel Small Company A 15.0
Smith Barney Small Cap Value A 14.5
Spirit of America Real Estate A 16.7
State Street Research Aurora A 16.9
State Street Research Global Resources A 25.1
Strategic Partners Real Estate Securities B 18.7
Stratton Monthly Dividend REIT 16.6
Stratton Small Cap Value 13.2
Strong Advisor Small Cap Value Z 18.3
Strong Mid Cap Disciplined 16.8
T Rowe Price Mid-Cap Value 14.0
T Rowe Price Real Estate 18.1
T Rowe Price Small Cap Value 16.1
TAMARACK Enterprise S 15.6
TAMARACK Microcap Value S 13.6
TCW Galileo Value Opportunities I 15.3
Third Avenue Real Estate Value 20.2
Third Avenue Small Cap Value 14.5
Third Millennium Russia 31.3
Tocqueville Gold 24.4
Tocqueville Small Cap Value 13.2
Turner Micro Cap Growth 24.4
US Global Accolade Eastern European 21.6
US Global Inv Global Resources 17.1
US Global Inv Gold Shares 15.7
US Global Inv World Prec Minerals 15.4
USAA Precious Metals & Minerals 24.5
Undiscovered Managers Behavioral Vl Instl 15.2
Undiscovered Managers REIT Instl 18.7
Van Eck Intl Investors Gold A 16.0
Van Kampen Real Estate Securities A 15.7
Vanguard Energy 14.0
Vanguard Precious Metals 19.7
Vanguard REIT Index 16.7
Victory Real Estate A 15.2
Wasatch Core Growth 16.8
Wasatch Micro Cap 24.2
Wasatch Small Cap Growth 13.1
Wasatch Small Cap Value 20.8
Wells Fargo Small Cap Opportunities I 14.5
Wells S&P REIT Index A 16.1

Stone is a senior writer at BusinessWeek Online and covers the markets as a Street Wise columnist

Edited by Patricia O'Connell

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