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.

 

• As lockdown measures across Europe eased, the number of coronavirus cases has been steadily rising, triggering worries of a second wave. Italy, Germany, and the UK have seen the number of infections increasing in recent weeks, although it is still way below the highs reached in March. In the United States, the number has been in decline since it reached a four-month high in July.

• While the pandemic is still going full steam, drugmakers around the world have been rushing to develop a vaccine. At least seven vaccines are now in Phase III large-scale efficacy trials, the fourth and last step before a vaccine is approved for widespread use. Several Chinese researchers have reached the third stage of trials, along with American biotech companies Moderna, AstraZeneca, and Pfizer.

• U.S. durable goods orders rose 11.2% in July, beating analysts’ expectations of 4.4%. Orders have been rising for three consecutive months, after declining substantially in April and May.

• U.S. crude oil inventories declined by 4.7 million barrels in the week ended August 26, registering the fifth consecutive weekly decrease.

• U.S. unemployment claims climbed to more than one million for the past two weeks, providing a sign the job market is still feeling the pain caused by the coronavirus pandemic.

• The U.S. Federal Reserve Chairman Jerome Powell has indicated that the Central Bank will allow inflation to run higher than its target of 2% to boost employment. As a result, yields on government bonds rose, while the dollar weakened.

• European manufacturing purchasing managers’ indexes (PMI) have continued to be strong in August, with most of them in expansion mode. However, most sentiment gauges declined from last month’s high. Germany’s services PMI declined from 55.6 to 50.8, barely in expansion territory, while manufacturing PMI rose from 53.3 to 55.3. Europe-wide manufacturing PMI fell from 51.8 to 51.7, while services PMI dropped from 54.7 to 50.1.

• Markets have continued to run hot these past two weeks, despite mounting worries about the economy.

• Vanguard’s large-cap index fund (VFIAX) gained more than 4%, becoming the best performer from the pack.

• Meanwhile, small-cap companies as represented by Vanguard’s small-cap fund (VSCIX) climbed just 0.86%, as most of them are connected to the U.S. economy and did not benefit from the stay-at-home economy.

• In fixed income, the picture was mixed.

• Investment-grade bonds as represented by Vanguard’s long-term investment grade bond fund (VWESX) lost 1.90% over the past two weeks, as yields rose based on signals provided by the Federal Reserve that it will keep interest rates low for longer.

• The best performer from the pack was Vanguard’s inflation-protected securities fund (VTAPX), which was up marginally by 0.6%.

• In sectors, all indices were up, with three exceptions.

• Vanguard’s technology sector fund (VITAX) is up 7.82%, the best performer from the pack, as this sector stands to gain especially from the coronavirus pandemic. T. Rowe Price’s communication sector fund (PRMTX) rose 7.78%, the second-best performer.

• Vanguard Energy Fund (VGENX) is the worst performer, with a decline of more than 3%.

• Foreign equities have posted strong gains, but Latin America was the only loser.

• Fidelity’s Latin America fund (FLATX) was down 0.15%.

• Meanwhile, Matthews India Fund (MINDX) is the best performer from the pack, with a gain of 6.72%.

• Alternative assets were all up.

• PIMCO’s commodity real return strategy fund (PCRIX) is again the best performer from the pack with an advance of 3.99%.

• Meanwhile, Cohen & Steers preferred securities fund (CPXIX) is up less than 1%, making it the worst performer from the bunch.

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Equities have continued to outperform, amid unprecedented support from the Federal Reserve. Meanwhile, as Fed Chair Jerome Powell signaled his intention to let the economy run hot, bonds have declined. Latin America is among the worst performers along with the energy sector.

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.

Funds return data is for the period between August 14 and August 28.