The collapse of the subprime-mortgage market dragged down shares of real-estate and financial companies in 2007. The worst groups of mutual...
The collapse of the subprime-mortgage market dragged down shares of real-estate and financial companies in 2007.
The worst groups of mutual funds were those that invested exclusively in property shares, which tumbled about 13 percent in 2007 (through Dec. 26), and those that bought stocks of banks, securities firms and mortgage companies, which were down 11 percent, according to research firm Morningstar.
The best performer last year among the 10 largest mutual funds was Fidelity Investments’s $80 billion Contrafund, managed by Will Danoff, which rose 21.3 percent, according to data compiled by Bloomberg.
Kenneth Heebner’s $3.5 billion CGM Focus Fund jumped 83 percent, the most by a diversified stock manager. Heebner, based in Boston, poured 35 percent of assets into oil producers and services companies and 17 percent into mining shares.
Most Read Business Stories
- 1 house, 45 offers: Homebuyers in Western Washington hard-pressed as supply remains scarce
- 55,000 in Washington state may have to pay back thousands in jobless benefits
- Boeing made an entire fake neighborhood to hide its bombers from potential WWII airstrikes
- Seattle artists worry potential sale of historic INS building could spell the end for their studios
- Frontier cancels flight, citing maskless passengers
Growth stocks outpaced value shares for the first time since 1998.
Value investors buy shares of companies they perceive as cheap relative to financial yardsticks including earnings, while growth managers buy shares of companies whose profits are increasing the fastest.
Janus Capital Group manages three of the industry’s top five growth funds. The $1.3 billion Janus Aspen Forty Portfolio rose 40 percent, almost three times the rate of the average competitor. Its 10 largest holdings include Research in Motion, maker of the BlackBerry e-mail phone; Google, owner of the most widely used Internet search engine; and Apple, maker of the iPhone and iPod. Their shares doubled on average.
High-yield municipal bond funds dropped 3.7 percent, the worst fixed-income performers. Bank-loan funds rose 1 percent, ranking second-to-last, while high-yield corporate bond funds rose 1.4 percent, ranking third-worst.
Bond funds that bet on the falling U.S. dollar did the best. The $197 million Rydex Weakening Dollar 2X Strategy, owned by Rydex Investments of Rockville, Md., climbed 17 percent.
The $243 million Merk Hard Currency Fund rose 15 percent.
“Our fund was a pure play on the falling dollar,” manager Axel Merk said from his office in San Francisco. “In a market where there is a global credit crisis, we find European currencies as the anchor of stability.”
The worst-performing bond fund was the $190 million Regions Morgan Keegan Select High Income, which plunged 59 percent because of losses tied to subprime mortgages.
Managers focused on Asia, excluding Japan, and Latin America had the top non-U.S. funds, posting average gains of 48 percent. Asian funds benefited from China and India, the fastest-growing economies.
The AIM China I Fund, managed by Houston-based AIM Advisors, soared 79 percent to place first. The MSCI Emerging Markets Index rose 39 percent.