Although mutual funds across many investment sectors fell steeply in the second quarter on fears of continued interest rate hikes and inflation, many portfolio managers are confident the economy and corporate profits will continue to deliver moderate growth, The Wall Street Journal reports. And even if the economy slows, as long as it does not fall into recession, they see areas of investment potential.

In fact, there was some evidence of the market's resiliency last Thursday when stock prices rose sharply despite another rise in rates by the Federal Reserve. Many on Wall Street are calling this "repricing of risk."

In particular, fund skippers point to the promise of large-cap growth stocks, which, they say, should return to favor and deliver stronger earnings than small- and mid-cap stocks.

Still, the declines mutual funds suffered in the second quarter are noteworthy and have many investors worried. Small-cap growth funds tumbled an average of 11.3% in the second quarter, while emerging-markets funds fell 9.6%. Diversified  international funds fell as much as 7.4%, and large-cap growth funds gave back 7.5% in profits.

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.