Is Your Portfolio Thriving?
What if 2007's first half ended rightnow? Stock-fund investors would be all smiles. Even with a good drubbing in June, most domestic equity mutual funds are posting positive gains for 2007 (through June 11). The average U.S. stock fund delivered an 8.06% total return (appreciation plus reinvestment of dividends and capital gains before taxes), vs. 7.28% for the Standard & Poor's 500-stock index.
International funds are doing even better. The typical diversified foreign portfolio has a 9.18% return. And funds that focus on the emerging markets, especially Latin America, are leading the way.
But investors in fixed-income funds have not fared well. Signs of inflation have spooked the bond market, with long-term bond funds losing the most ground in the past month. Most municipal bond funds—short or long, national or single-state—are also down for the year.
Overall, the typical taxable bond fund is up a mere 1.16% in 2007, while the Lehman Brothers Aggregate Bond index gained 0.31%. So much for finding safety in the fixed-income market. At this rate, bond portfolios might be posting big losses by yearend.
By Lauren Young