During the recent recovery of the stock market, growth mutual funds that exchanged their tech holdings for more conservative offerings are not posting the gains they would have hoped for, Dow Jones reports.
Gains in the Nasdaq and a general market recovery have propelled many mutual funds to significant returns. Small-cap growth funds have risen 21.2% on average in the three months ending last week, while mid-cap growth funds have risen 16.1%.
But only 18% of 655 small-cap growth funds beat their primary benchmark, the Russell 200 Growth Index, during the two months through the end of May. In 1999, 58% of small-cap growth funds beat the index.
Experts are attributing these watered-down gains to the fact that growth-oriented mutual funds unloaded technology holdings when the sector was taking a severe beating. Instead, they opted for more conservative holdings.
A good example of this is the Janus Venture Fund. It currently has only 10% of its assets in the information economy sector, compared with nearly 50% in the high-flying market of 1999.
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.