Every fortnight, MutualFunds.com provides a snapshot of the performance of some key mutual funds which tries to accurately capture the investor interest in specific areas of the financial markets. The report is aimed at providing a quick overview of the sectors, regions and asset classes that moved in a meaningful manner during the last two weeks.
Toward the end of October, outflows from mutual funds intensified, with $28.7 billion withdrawn during the week ended October 31 and $12.7 billion pulled out in the week prior.
The lion’s share of outflows occurred in the realm of bond funds, with nearly $25 billion withdrawn over the two weeks. Equity mutual funds suffered less of a severe blow, as roughly $11 billion were pulled out. Large-cap equities was the only category that experienced inflows during the period, less than $300 million.
The U.S. Democrats gained control of the House of Representatives for the first time in eight years, in a blow to President Donald Trump’s agenda of cost cuts and repealing the Affordable Care Act. Republicans won the Senate.
The U.S. Federal Reserve maintained interest rates at 2.25%, but strongly signaled a rate hike will come in December, with a few more to follow next year. A recent market rout and an abrupt uptick in inflation have not convinced policymakers to withhold their fire, indicating they are pleased with the current environment.
The U.S. jobs market is strong and improving. In October, the economy added 250,000 jobs versus the 194,000 expected by analysts. The unemployment rate stood flat at 3.7%, while average hourly earnings increased by 0.2%.
Rising energy prices have taken inflation in the Eurozone above the European Central Bank’s target. Consumer prices in Europe were up 2.2% in October, largely due to rising prices for energy, food and alcohol. Stripping the volatile items, including energy, inflation was up just 1.1%.
We provide this report on a fortnightly basis. To stay up to date with mutual fund market events, come back to our news page here.
Large-cap equities were favored by investors over the past week, with the broad Vanguard 500 Index (VFINX) surging 4.79%, the best performer.
Meanwhile, bond funds were beaten up. Vanguard Total Bond Market Index Fund Investor Shares (VBMFX) declined 0.58%.
For the rolling month, technology-focused Nasdaq 100 (NASDX) is the worst performer, with a loss of 3.8%.
Check out our previous Mutual Funds Scorecard here to keep track of the trends.
Chemicals were the best performers for the past two weeks, with Fidelity’s Select Chemicals (FSCHX) advancing 7.13%. In part, the strong performance was thanks to DowDuPont’s blowout earnings for the third quarter. DowDuPont makes up nearly a fourth of the index.
On the other side of the spectrum, Fidelity Real Estate Income Fund (FRIFX) was up 1.46%.
For the rolling month, the energy fund (VGELX) continued to be the worst performer, down as much as 11.4%.
Meanwhile, consumer staples (FDFAX) were the best performers for the rolling month, with an advance of more than 2%.
India (WIINX) was by far the best performer for the past fortnight, up as much as 6%, as market sentiment improved and foreign outflows diminished in intensity. The strong fortnightly performance propelled Indian equities to the best performer spot for the rolling month as well, up 7.42%.
After weeks of gains, Latin American Equities (RLAIX) back down for the past fortnight, being the only loser with a drop of 1.49%.
For the rolling month, the Japanese stock market tracker, Hennessy Japan Investor Fund (HJPNX) remains the worst performer, down 8.72%. Bank of Japan admitted that it will not be able to achieve its goal of 2% inflation in the near future and downgraded economic forecasts.
Major Asset Classes
T.Rowe’s Mid-Cap Equity Growth Fund, (PMEGX) posted the strongest gains these past two weeks, jumping 5.32%. Technology, industrials and healthcare stocks make up more than half of the index, with Textron, Microchip Technology and Teleflex having the biggest individual weighting.
PIMCO’s Extended Duration Fund, (PEDIX) declined 1.87% for the past two weeks, making it the worst performer.
For the rolling month, John Hancock Multicurrency Fund (JCUAX) remains the best performer, with a tepid advance of 0.46%.
Commodities (DXCTX) suffered the most severe blow for the rolling month, tumbling 4.6%.
The Bottom Line
Equities have rebounded in the past two weeks, but bonds are still in sell-off mode. Chemicals were the most favored, thanks to strong financial results by DowDuPont, while India regained trust with foreign investors as outflows started to reverse. Meanwhile, the Japanese stock market is continuing to suffer and Bank of Japan seemingly cannot do much about it.
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