Small-cap mutual funds had the strongest returns of the second quarter as surging oil prices at the end of last month prompted investors...
NEW YORK — Small-cap mutual funds had the strongest returns of the second quarter as surging oil prices at the end of last month prompted investors to abandon large-cap industrial stocks and move into smaller, more specialized companies.
For the quarter that ended Thursday, small-cap growth funds — some of the most aggressive and risky funds — led all U.S. diversified mutual funds with a 3.77 percent return, according to data released yesterday by fund-watcher Lipper. Small-cap core funds were second with a 3.3 percent return, while mid-cap core funds had a 3.24 percent return, on average.
Preliminary figures released last week had large-cap growth funds leading the pack in quarterly returns, but the past week’s sell-off, prompted by rising oil prices, led to reduced returns in that category of funds. But large-cap growth funds still managed average returns of 2.88 percent.
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“We had a couple of days that changed the equation a little,” said Donald Cassidy, senior analyst at Lipper. “We saw an interesting shift in people’s risk tolerance that may carry forward.”
In sector equity funds, real-estate-focused funds were the best performers, with average returns of 13.13 percent, thanks to the strong performance from real-estate investment trusts. Utility funds benefited from the surge in oil and posted average returns of 7.25 percent.
Despite the late surge in oil futures, natural-resources funds, which include oil stocks, posted a 3.55 percent return, much lower than previous quarters. They’ve still posted a one-year average return of 37.65 percent.
“The thing to keep in mind is that natural resources isn’t just oil,” Cassidy said. “It’s forest products, it’s metals, it’s anything you can pull out of the ground. And we had some other commodities under pressure this quarter.”
For mutual funds invested in overseas stocks, Latin American funds had returns of 10.17 percent, while funds combining all emerging markets, primarily in Latin America and Asia, saw average returns of 3.87 percent.
Among individual funds, three of the top five performers for the second quarter were real-estate funds. ProFunds Real Estate UltraSector Fund had the top return for the quarter, at 20.36 percent, followed by ProFunds UltraSector Mobile Telecommunications fund with a 18.17 percent return.
ProFunds Biotech fund was third with an 18.01 percent return, with PIMCO’s Real Estate Return Strategy Fund posting a 17.88 percent return and Adelante’s U.S. Real Estate Securities Fund’s 15.83 percent return rounding out the top five.
The worst five performers for the quarter came from a variety of funds. The worst performer, with a 25 percent negative return, was Ameritor’s Investment fund, a small-cap growth fund, followed by ProFunds’ Basic Materials fund with a 14.18 percent negative return.
Corbin’s Small-Cap Value fund was third worst with an 11.79 percent negative return, Fidelity’s Select Paper and Forest Products fund posted negative returns of 11.77 percent, and ProFunds’ Rising Rates Opportunity fund, a bear fund designed to hedge against falling markets, had a negative return of 10.61 percent.