Investors made very little, if anything, from most mutual funds last quarter. Phew.
A relatively flat quarter feels like a victory because investors were bracing for much worse earlier this year, when the Standard & Poor’s 500 index was in the midst of its worst start of a year in history. Only a rally in the last seven weeks got stock funds back close to even.
It’s the latest jarring quarter for investors, who have endured sharp swings since last summer following years of remarkably calm and strong returns.
The first six weeks of the year brought a terrifying thud for stock funds. Worries were already high coming into the year that a weak global economy would pull the United States back into a recession. Poor numbers coming out of China and elsewhere worsened the concerns.
Investors responded by dumping stocks. The largest fund by assets, Vanguard’s Total Stock Market Index fund, was down as much as 11.3 percent for the year on Feb. 11. The fund hasn’t had that bad a performance for a quarter since 2011.
All in, the Vanguard Total Stock Market Index fund returned 1 percent for the quarter, as of Wednesday. While that pales in comparison to the 6.2 percent it returned a quarter earlier, it’s still much better than the steep loss it was on pace for in mid-February.
Investors have been keen to get into foreign stock funds, pouring more money into them over the past year than any other type of investment.
All that popularity didn’t help their returns last quarter. Most foreign stock mutual funds and exchange-traded funds logged modest losses. The average fund that invests in a mix of large-cap foreign stocks lost 1.4 percent, for example.
Chinese stock funds were some of the worst performers, losing an average of 4.8 percent. European and Japanese stock funds also lost between 2 percent and 2.2 percent, on average.
Emerging-market stock funds were an outlier, returning 3.6 percent on average.
When stocks around the world were tumbling at the start of the year, dollars poured into bonds in search of safer returns. All that demand pushed up prices for bonds, and the largest bond fund by assets, Vanguard’s Total Bond Market Index fund, returned 2.9 percent.
Funds that focus on longer-term bonds did better than short-term funds. Long-term bond funds returned an average of 5.6 percent, versus 2.3 percent for intermediate-term bond funds, which are the most popular type.
For once, gold funds were winners. The best-performing types of mutual funds last quarter, by far, were those that focused on gold and the companies that pull it from the ground. The SPDR Gold Shares ETF, which tracks the price of gold, surged 16 percent over the quarter. The jump for gold miner stocks was even more pronounced, and the average gold-mining stock fund surged 41.7 percent last quarter.
The biggest gold-mining fund by assets, Vanguard’s Precious Metals and Mining fund, is still down by about two-thirds over the last five years.
