|
BARGAIN-HUNTING VALUE FUNDS TAKE LEAD SPOT IN FUNDS DERBY DURING DECEPTIVELY FLAT THIRD QUARTER Performance Advantage Drifts Away from
Large-Cap Growth Funds - Will the Hot Money Follow?
New York, Oct. 3, 2000 - As they examine the third quarter returns of their
mutual funds, U.S.-based investors are likely to see better performance
numbers from the value-oriented equity mutual funds in their portfolio than
from the growth funds that have lead the pack over the last several years.
Funds that own the largest, fastest-growing companies in the U.S. are no
longer on top. Will the strong showing by value funds and
smaller-capitalization funds lead investors to move assets into these
long-ignored sectors? Lipper Inc., the leading provider of mutual fund
information, analyzed the returns of thousands of equity funds for the
quarter ending September 30, 2000 and noted the following trends:
U.S. DIVERSIFIED EQUITY FUNDS (USDE)
Value outpaced growth across all capitalization ranges.
ye The solid showing by value-oriented funds in both absolute terms and
relative to growth funds highlights the continued shift from the five-year
trend of market leadership from growth stocks, as investors continue to look
for more enduring sources of performance in response to continued stock
market volatility.
"Value funds have been putting up good relative numbers off and on for a
year, but growth funds have been getting all the headlines," said Edward S.
Rosenbaum, CFA, Vice President and Director of Research for Lipper. "Now,
with growth funds' performance reverting to the mean, value funds' strong
performance is finally getting noticed."
Performance of Value and Growth Funds by Market Capitalization for Q3 2000:
| CAPITALIZATION | VALUE | GROWTH | DIFFERENCE |
| Large-Cap | 3.25% | -0.47% | 3.72% |
| Multi-Cap | 5.53 | 2.66 | 2.87 |
| Mid-Cap | 6.8 | 3.12 | 3.69 |
| Small-Cap | 6.53 | 0.37 | 6.16 |
The superior performance of the Mid- and Small-Cap segments continued, and
signals a shift in assets from large-cap funds to those owning small- and
mid-cap stocks.
Middle-of-the-road proved best this quarter, with the Mid-Cap Core category
besting all other USDE fund classifications (+7.29% for the quarter).
Value's strong performance helped mid-cap funds, because many of the largest
stocks in the value universe are small enough to be included in mid-cap
portfolios.
The S&P 500 Index Objective funds category trailed all other USDE
classifications during the third quarter and on a year-to-date basis.
U.S. Diversified Equity funds posted year-to-date returns (+6.46%) closer
to historical norms than in recent years, suggesting reversion to the mean.
"There are two possible outcomes that will deliver long-term results in line
with the returns of the past several decades," said A. Michael Lipper,
Chairman of Lipper Inc. "The first is a prolonged period of moderately low
returns. The second possibility is far less pleasant."
SECTOR EQUITY FUNDS
Financial Services led all sectors (and all investment objectives) during the
quarter, the beneficiary of merger-mania and a perceived peak in interest
rates, along with improved premium pricing at property & casualty insurers
(+21.12%).
With investors anticipating no further tightening by the Federal Reserve
for the duration of the year, property & casualty insurers making up ground
in premium pricing, and consolidation sweeping the banking and brokerage
industry, Financial Services funds turned in their best performance since the
first quarter of 1991.
Health/Biotechnology funds (+12.50%) benefited from reduced fears of
government interference on drug pricing and continued advances in genome
research. For the year-to-date, the sector tops all others, up 60.28%.
The rotation away from the once-torrid Science & Technology area (-1.17%)
seems to have accelerated following revenue warnings at Intel and other
high-profile technology companies, but the sector still leads all others over
all periods two years and longer.
Telecommunications funds (-7.34%) took a hit this quarter as many of the
sector's high-flying stocks fell back to earth.
WORLD EQUITY FUNDS
Developed and emerging markets international equity funds declined across
nearly all categories.
All world equity categories except Canadian funds (+4.03%) were down for
the quarter, victims of a falling euro and sharply higher oil prices.
Asian and Pacific Region funds suffered double-digit declines, with the
Pacific Ex-Japan category down -15.57%. A weakening in several Asian
currencies exacerbated oil price hikes, because crude is bought and sold in
dollars. Asian funds, which had rebounded nicely from their 1997 collapse,
now show negligible gains for the five-year period.
Crude oil prices, the slide in the euro, and trouble in the technology and
telecom sectors led to losses in the European Region funds (-6.21%).
Lipper Inc., a Reuters Company, is headquartered in Summit, NJ. Founded in
1973, Lipper is the leading provider of data and analyses on the investment
company business. The firm is known for its extensive data on open-end
(mutual) funds, closed-end funds, variable annuity/life funds and foreign
registered funds. With data going back to 1959, Lipper currently tracks
31,610 U.S. Registered Funds, with assets in excess of $8.4 trillion (as of
August 31, 2000).
[ PRESS RELEASES ] Back to Table of Contents |
|
| | [ top ] | | welcome | I've got your number | my books | pick of the week | interview of the week | remember this... | mailing list / contact | topic search | SOFE members | my weekly column | helpful links | home |
|
