Colorado mutual funds with holdings in technology and telecommunications performed well during the third quarter, while funds that bet on energy, gold or a downturn on Wall Street slumped.
Stocks and mutual funds in Colorado and nationwide received a boost during the quarter from the recent slide in oil prices and the Federal Reserve’s decision to not move interest rates higher. On Thursday, the Dow Jones industrial average briefly traded above its all-time closing high of 11,722.98 set Jan. 14, 2000, before retreating to close at 11,718.45, up 29.21 points.
The three major indexes have all posted gains this quarter, which ends today. The Dow is up 5.1 percent; the S&P 500 is up 5.4 percent; and the Nasdaq is up 4.5 percent. The S&P and the Nasdaq remain far from their record highs, as both indexes posted bigger gains than the Dow before stocks sank beginning in 2000.
What’s in store for investors during 2006’s stretch run?
“The downside risk is higher than the upside potential,” said Jeffrey Hirsch, editor of the Stock Trader’s Almanac of Nyack, N.Y.
Hirsch said money managers this week pumped money into the market, pushing stocks higher so that third-quarter returns would appear better to their investors.
Fred Taylor, a money manager with Denver-based Northstar Investment Advisors, said stocks could move higher in the fourth quarter, depending on several factors.
Investors could pour more money into stocks now that interest rates have stagnated, making bond and money-market funds less attractive.
Falling mortgage rates would help steady a wobbly housing market, which could propel consumer confidence heading into the holiday season – a key time for retailers.
“Stocks should rally through the end of the year,” Taylor predicted.
He suggested that investors move out of energy – which had posted massive gains until this quarter – and into bank, health-care or technology stocks.
That was largely the approach used by Robert Brody, manager of the American Growth Fund, based in Denver. The fund, with $31 million in assets, is up 11.4 percent for the quarter and 5.2 percent this year.
Brody said more than half of the fund’s holdings are in technology companies, including Motorola Inc., Hewlett-Packard Co. and Cisco Systems Inc. The fund is also laden with drug stocks.
Other top locally based mutual funds during the quarter included Dreyfus Founders Growth, up 7.2 percent; Icon Telecommunications & Utilities Fund, up 7 percent; and Westcore Select, up 6.9 percent.
Among the worst-performing funds this quarter have been Icon Energy, down 12.6 percent; Clough Global Allocation, down 8.1 percent; and Icon Long- Short, down 1.9 percent.
Staff writer Will Shanley can be reached at 303-954-1260 or wshanley@denverpost.com.
