Mutual Funds Scorecard: July 23 Edition

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.

• Another two weeks of negative outflows from long-term mutual funds, despite the stock market in the U.S. reaching record highs. For the two weeks ended July 10, around $7 billion was withdrawn from mutual funds, with equities bearing the brunt of outflows.

• More than $25 billion flew out of equities, with domestic, large-cap and multi-cap funds particularly hit. The negative equity flows were offset by positive bond fund flows of $17 billion. Taxable and investment-grade bonds were particularly in vogue.

• Christine Lagarde, former managing director of the International Monetary Fund, was selected to be the next president of the European Central Bank. Investors are largely optimistic about the selection, as Lagarde is expected to continue the monetary easing adopted by current President of the ECB, Mario Draghi.

• Federal Reserve Chair Jerome Powell said the Fed is monitoring various economic developments to arrive at an interest rate decision. He said the U.S. economy is facing risks from falling business sentiment, a global trade slowdown and low inflation. At the same time, Fed minutes for the June meeting revealed that policymakers saw a stronger case for a rate cut.

• U.S. core consumer price index (CPI) climbed 2.1% in the 12 months ended June, up from 2% in May. Headline CPI, however, advanced 1.6%, held back by falling gasoline and food prices.

• At the G7 meeting of the seven most developed countries in the world, policymakers agreed to take a tough stance on cryptocurrencies, including Facebook’s proposed virtual currency Libra. In addition, the countries agreed to rein in technology giants.

• U.K. GDP grew by 0.3% in April compared to the previous month, largely thanks to a ramp up in car manufacturing. The figure is in line with forecasts and represents a marked improvement from the prior month when output declined 0.4%. A new report by the National Institute of Economic and Social Research concluded there was a chance the U.K. economy was already in recession due to Brexit worries.

• U.S. retail sales increased by 0.4% in June compared to the previous month, beating expectations of 0.1%. Core retail sales also grew by 0.4%, the fourth consecutive monthly increase.

Don’t forget to check our previous edition of the scorecard here.

Broad Indices

• Vanguard’s total international bond index fund (VTIBX) was the best performer for the two weeks ended last Friday, with a slight advance of 0.09%.

• Meanwhile, Vanguard international stocks fund (VGTSX) declined 0.82%, which is the worst performance from the pack.

Click here to explore other funds from Vanguard.

Major Sectors

• Sectors posted mixed performances.

• The Fidelity select retailing portfolio (FSRPX) gained 0.49% these past two weeks, on the back of strong retail sales in the U.S.

• The Fidelity chemicals sector fund (FSCHX) shed 2.5%, representing the worst performance from the pack.

Make sure to click here to learn about the other funds from Fidelity.

Foreign Funds

• Foreign equities were all down.

• The Indian equities fund (WIINX) lost nearly 4%, as the lack of monetary stimulus and the prospects of additional taxes took a toll on the equity market.

• The Vanguard emerging markets fund (VEIEX) also lost 0.22%, although that was the best performance.

Major Asset Classes

• Among the major asset classes, the picture was mixed, although most of the funds were down.

• John Hancock’s currency fund (JCUAX) gained more than 1%, becoming the top performer from the bunch.

• PIMCO’s long-term bond fund (PEDIX) declined nearly 1%.

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The Bottom Line

Bond mutual funds experienced a heavy bout of inflows over the past two weeks, although that was more than offset by negative flows in equities, providing for an overall negative picture. Volatility was decidedly low in all asset classes, with only Indian equities seeing a substantial decline. Bonds were more favored by investors than stocks, while currencies had a strong two weeks.

We provide this report on a fortnightly basis. To stay up to date with mutual fund market events, return to our News page here.