Strong Gains for Stocks: A third-quarter review of mutual-fund performance

With three quarters down, 2013 is shaping up as a very good year for stock investing.

In the three months through September, the average diversified U.S.-stock mutual fund returned 7.3%, according to Thomson Reuters Corp.'s Lipper unit. That brought the year-to-date return to 21.3%. The stocks of small, fast-growing businesses have been particular market favorites, with the average small-cap-growth fund gaining 12.7% in the quarter and 31.5% for the first nine months of 2013.

Diversified international-stock funds were up more than U.S. funds in the third quarter—an average of 10.1%. After weaker results earlier in the year, they are up an average of 13% for the year to date, according to Lipper. Emerging-markets funds returned 5.1% on average in the quarter but are down 2.8% so far this year.

Meanwhile, in fixed income, interest rates ratcheted up for much of the third quarter—with the 10-year Treasury note reaching 3% in early September—before tumbling. When all was said and done, the average intermediate-term investment-grade bond fund returned 0.6% for the quarter, according to Lipper.

For the year to date, though, those widely held bond funds returned a negative 2%, as price declines exceeded interest income.  In the second quarter, the Federal Reserve indicated it was inching toward "tapering" the bond-buying program intended to help keep interest rates low and to spur economic growth. That sent rates climbing—and in the second quarter, intermediate bond funds returned an average of negative 2.7%.

On the stock side, despite strong returns for U.S. stocks this year, investors continue to be much more interested in international-stock mutual funds.

In the third quarter through Sept. 25, foreign-stock funds took in a net $26.5 billion, while U.S.-stock funds took in $4.5 billion, according to estimates. For the year to date, the overseas funds have seen net inflows of about $99 billion, vs. $13 billion for domestic-stock funds.

Source:  Karen Damato, Wall Street Journal

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.