Big-caps steer higher, extending rebound
Gold and natural resources lead week
By Craig Tolliver, CBS.MarketWatch.com
Last Update: 1:26 PM ET Aug. 16, 2002
NEW YORK (CBS.MW) -- Large-cap growth funds trended higher in another week of gains for stock mutual funds, even as traditional safe havens -- gold and energy-laden natural resources funds -- led the way, Lipper said Friday.
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Over the five-day period ended Thursday, the average stock mutual fund gained 2.3 percent.
Diversified funds investing in the U.S. stock market added 2.4 percent on the week, and sector funds returned 2 percent. Equity funds investing abroad rose 2.1 percent.
What had been a small world after all is now shifting to a large-cap bias, and growth players are gaining ground on their value counterparts.
Among U.S. diversified equity funds, mid-cap growth funds led the week with a 3.2 percent gain, but much more compelling was the 2.9 percent rise in large-cap growth funds and small-cap value's modest return of less than 1 percent.
Over the past four weeks, large-growth spirited 4.8 percent higher while small-value actually declined three-tenths of 1 percent.
"For the week we found two things. One is that the tech stocks in large-cap growth actually did better than their small-cap counterparts," observed Lipper analyst Andrew Clark.
"We were also looking at traditional valuation measures like price/earnings and price-to-book, cash flows... and large-cap growth looks 'reasonably' cheap -- the emphasis on reasonably," Clark quipped.
For the past two years, small-value has been the only diversified category (with the exception of bear funds) to muster any positive performance, returning 7.6 percent annually. Meanwhile, large-growth plummeted nearly 30 percent over the two-year period.
Meanwhile, the broader growth category -- down 31 percent a year the last two years -- is up by 2.5 percent for the month and 2.1 percent for the week.
Value funds lost 3.4 percent for the two-year period but got a lift of 2.7 percent in the last four weeks and 2 percent in the latest week.
Large-cap funds gained 2.7 percent for the week and 4.9 percent for the month after losing 23 percent annually the past two years. Small-company funds, off nearly 11 percent for two years, added 1.4 percent for the week but are marginally negative over the four-week period.
Sectors
Energy stocks powered natural resources to a 5.7 percent gain for the week. Energy-specific funds, such as Fidelity Select Energy (FSESX: news, chart, profile) and Rydex Energy Services (RYVIX: news, chart, profile), topped the category with gains approaching 14 percent.
Energy stocks had a generally upbeat week, culminating to a nice rally on Thursday. The Oil Service Index rose by 6.2 percent Thursday with Baker Hughes (BHI: news, chart, profile) scoring a gain of more than 10 percent to set the pace.
The CBOE Oil Index ($OIX: news, chart, profile), a barometer of major integrated oil issues, climbed 1.9 percent. The Amex Natural Gas Index ($XNG: news, chart, profile) rose 2.3 percent. See full story. See latest news on energy stocks.
Telecom and tech funds rose by 3.1 percent and 2.1 percent, respectively, for the week. Financial services and utilities funds added more than 2 percent each. Biotech and real estate funds were largely flat for the week.
Still, real estate is the only positive sector category for the year to date, up 4.3 percent.
International
Gold funds finished a seesaw week, topping all categories with a 5.7 percent gain and narrowly edging out natural resources. The group continues to be the top-performing classification year to date, up 36 percent, despite going through some turbulent times this quarter.
Overseas, most markets took their cues from rising U.S. equities, and increased in tandem, Lipper said. Pacific region funds excluding Japan especially benefited from the U.S. movement to the upside, gaining 3.7 percent on strong gains in Taiwan and South Korea.
Latin America investors pulled back from last week's heady gains, as worries about what would happen to the Brazilian economy resumed. Latin America funds fell 6.3 percent in the latest week after returning 8.5 percent in the prior week on Brazil's winning a $30 billion loan from the International Monetary Fund.
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