NEW YORK — Sometimes, nearly everyone wins.
Last quarter was a winner for the vast majority of mutual-fund investors as 87 percent of all funds delivered gains. Rising stock markets around the world and a drop in interest rates drove the returns, continuing a years-long run for funds.
To be sure, the gains were typically smaller than what investors enjoyed earlier in this bull market. But they were widespread. Of the 95 different fund categories that Morningstar tracks, 84 logged gains on average. Those with losses were often in niche areas, such as Latin American stock funds or emerging-market bond funds, and probably play only a supporting role in portfolios.
Consider the mutual fund that’s a centerpiece of many retirement accounts: Vanguard’s Total Stock Market Index fund. It’s the largest fund by assets, nearly double the size of the No. 2 fund, and it delivered its 10th quarter of gains in the last 11 despite starting the year slowly.
It was down more than 3 percent in mid-January, hurt by worries about plunging profits for energy companies. The fund tracks the performance of the broad U.S. stock market, and 7 percent of its portfolio is in the oil and gas industry.
But stocks recovered as the quarter progressed, and the fund ended up returning 1.8 percent. It got a particular boost from smaller companies in its portfolio.
The surging dollar helped fuel demand for small-cap stocks. The dollar jumped to its highest level against the euro in more than a decade, and it also set multiyear highs against the Japanese yen, Canadian dollar and other currencies.
That hurts U.S. companies that do lots of business abroad because sales made in euro or yen are worth fewer dollars than a year ago.
A look at some of the other trends that drove fund performance last quarter:
• Central banks in Europe and Japan are pushing big stimulus programs for their economies, sending their stock markets higher. Japanese stock funds returned an average of 10.9 percent last quarter, the best performance of any fund category. European stock funds returned an average 4.8 percent.
• Health care stock funds are still hot. They have been some of the best not only over the last quarter but also over the last year. They returned an average of 10.7 percent from January through March, second best among 95 fund categories.
• Bond funds are defying expectations. Rising rates are one of the biggest fears for bond-fund investors. They can cause losses by dropping the price of existing bonds. Entering the year, much of Wall Street projected that interest rates would rise. The economy was strengthening, and the Federal Reserve was expected to raise its key short-term interest rate for the first time since 2006.
