Published: Saturday, June 30, 2007
Natural-resources stock surge continues
NEW YORK - Natural-resources stocks continued their winning streak in the second quarter, pushing mutual funds that invest in them to double-digit gains, a survey said on Friday.
Besides natural-resources funds, which rose 14 percent for the quarter and have increased 21 percent so far this year, telecommunications funds similarly outpaced most other fund types. Over all, however, most mutual fund classes showed gains for the quarter, said the survey by mutual fund tracker Lipper Inc.
"It was a great quarter," said Lipper analyst Jeff Tjornehoj. He noted that it ended on a down note. "The last third of the quarter was really rather flat. We got most of our return early on and merely held on by our fingernails."
The 8,010 U.S. diversified stock funds tracked by Lipper showed an average preliminary return of 6.3 percent for the three months ended Thursday. The final trading session of the quarter was Friday, when major stock indexes were little changed. Collectively, the funds' assets rose to $4.14 trillion from about $3.82 trillion at the end of the first quarter.
The Standard & Poor's 500 index rose 5.81 percent during the second quarter compared with an increase of only 0.81 percent in the first quarter. The Dow Jones industrial average, made up of 30 blue chip stocks, gained more than 1,000 points in the second quarter, advancing 8.53 percent. Its first-quarter increase was a modest 0.87 percent.
Some of the same fund types that have shown strong performances in recent quarters continued to climb in the second quarter. The 63 China regional funds tracked by Lipper showed an average return of 21 percent, while two dozen Latin America funds had an average return of 20 percent.
"I give better odds on China continuing its upward momentum than I do on Latin America," Tjornehoj said. "I think Latin America from a credit standpoint is very expensive. At some point that gas will be run from the tank and investors are going to have to start being more critical about how they view Latin America.
"There is a lot going on in China's favor. And as investors in the United States, I think there is still some time left to capture that euphoria before things settle back down to Earth."
U.S. funds that invest in and around China are up 25 percent for the year and have jumped 66 percent in the past 12 months. For Latin America funds, the year-to-date increase is 26 percent, while the 12-month increase is 62 percent.
Not all areas saw such gains. Concerns about weakening demand and a souring of subprime mortgages - loans made to those with poor credit histories - might have spread to real-estate investment trusts, Tjornehoj said, noting that most REITs invest in commercial and not residential property. Demand for office and retail space held up in many U.S. markets even as residential markets have generally pulled back. Regardless, real estate funds fell 7.7 percent in the second quarter.
Besides natural-resources funds, which rose 14 percent for the quarter and have increased 21 percent so far this year, telecommunications funds similarly outpaced most other fund types. Over all, however, most mutual fund classes showed gains for the quarter, said the survey by mutual fund tracker Lipper Inc.
"It was a great quarter," said Lipper analyst Jeff Tjornehoj. He noted that it ended on a down note. "The last third of the quarter was really rather flat. We got most of our return early on and merely held on by our fingernails."
The 8,010 U.S. diversified stock funds tracked by Lipper showed an average preliminary return of 6.3 percent for the three months ended Thursday. The final trading session of the quarter was Friday, when major stock indexes were little changed. Collectively, the funds' assets rose to $4.14 trillion from about $3.82 trillion at the end of the first quarter.
The Standard & Poor's 500 index rose 5.81 percent during the second quarter compared with an increase of only 0.81 percent in the first quarter. The Dow Jones industrial average, made up of 30 blue chip stocks, gained more than 1,000 points in the second quarter, advancing 8.53 percent. Its first-quarter increase was a modest 0.87 percent.
Some of the same fund types that have shown strong performances in recent quarters continued to climb in the second quarter. The 63 China regional funds tracked by Lipper showed an average return of 21 percent, while two dozen Latin America funds had an average return of 20 percent.
"I give better odds on China continuing its upward momentum than I do on Latin America," Tjornehoj said. "I think Latin America from a credit standpoint is very expensive. At some point that gas will be run from the tank and investors are going to have to start being more critical about how they view Latin America.
"There is a lot going on in China's favor. And as investors in the United States, I think there is still some time left to capture that euphoria before things settle back down to Earth."
U.S. funds that invest in and around China are up 25 percent for the year and have jumped 66 percent in the past 12 months. For Latin America funds, the year-to-date increase is 26 percent, while the 12-month increase is 62 percent.
Not all areas saw such gains. Concerns about weakening demand and a souring of subprime mortgages - loans made to those with poor credit histories - might have spread to real-estate investment trusts, Tjornehoj said, noting that most REITs invest in commercial and not residential property. Demand for office and retail space held up in many U.S. markets even as residential markets have generally pulled back. Regardless, real estate funds fell 7.7 percent in the second quarter.
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