Equity mutual funds took a beating in May, with every single category in the red, except for utility and bear market funds, Chicago Tribune reports. And even that was unimpressive; utility funds eked out a scant 0.06% gain, while bear market funds rose 6%. It was the worst month for equity funds since July 2004.

Categories that have been the strongest in recent months fared the worst in May, including small-cap, natural resources, commodities and emerging-market international funds.

Amid fears of increasing interest rates in the U.S., which would hamper American consumers' pocketbooks, emerging-market funds declined an average of 11%. Small-cap funds fell 6%, and gold funds gave up 9.3%. Even bond funds fared poorly, with the average intermediate U.S. government bond fund declining 0.08%.

Analysts are divided as to whether the steep declines in May portend a weak market going forward. Mary Ann Bartels of Merrill Lynch believes the sell off was "primarily driven by fast money or hedge funds" and that stocks will regain strength in the coming months. But Tobias Kevkovich, a strategist with Citigroup, is particularly troubled by the $7.2 billion that investors redeemed in a two-week period in May. He believes investors could continue to be spooked by the declines across the board and that as they redeem money and reach "panic territory," the market will continue in a downward spiral.

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.