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.

 

• Coronavirus infections have picked up in Europe, as the continent eased lockdown measures. France, Italy, and Germany have all seen rises in cases. The spikes in the number of cases has prompted the UK to reinstate a ban on meetings of more than six people. Further measures are bound to hit an already weak European economy.

• The numbers of daily cases in the U.S. and Brazil, which did not put in place national lockdown measures, still remain at a relatively high level.

• The European Central Bank led by Christine Lagarde indicated that more stimulus is not forthcoming, despite a strengthening of the euro, which will make the region’s exports less attractive. Lagarde struck an upbeat tone about Europe’s economic recovery and even upgraded the 2020 growth forecast due to a strong rebound in activity and higher inflation. Still, Lagarde warned that the second wave of coronavirus infections represented a headwind.

• Germany’s ZEW economic sentiment has hit a 20-year high in September of 77.4. Europe-wide economic sentiment also reached a 16-year high of 73.9. Both figures were significantly up compared to the prior month and comfortably beat analyst estimates.

• China’s Caixin manufacturing purchasing managers’ index (PMI) rose for the fourth consecutive month in August, to 53.1, reaching a high not seen since 2011.

• U.S. ISM manufacturing PMI rose for the third consecutive month in August, to 56, hitting a two-year high. Meanwhile, non-manufacturing PMI dropped from 58.1 to 56.9 in August, but confidence is still strong.

• U.S. unemployment claims have continued to decline in the past two weeks, totaling 1.6 million. This is an improvement from the prior two-week period but still way off pre-pandemic levels of around 200,000 per week.

• The U.S. economy added 1.4 million jobs in August, while the unemployment rate declined from 10.2% to 8.4%. Average hourly earnings increased by 0.4% month-over-month. The progress was pretty strong, but there is still a way to go to reach the pre-pandemic unemployment level of 3.5%.

• Crude oil inventories fell by 8.1 million barrels in the week of September 2 but rose by 2 million the next week. The trend is still to the downside, as stockpiles had fallen for six consecutive weeks before the September 10 week.

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.

• The impressive rally in equity markets since the COVID-19 selloff has ended. All indices were down by 4%-5%.

• Vanguard’s Russell 3000 Index fund (VRTTX) was the worst performer from the pack, with a decline of 5.2%.

• Meanwhile, Vanguard’s mid-cap index fund (VMCIX) lost 3.83%, representing by far the best performance from the bunch.

• In fixed income, the picture was again mixed, with riskier assets dumped by investors.

• Vanguard’s investment-grade bond fund (VWESX) was the best performer, with an advance of 1.52%, as investors flew to safe-haven assets.

• At the same time, Vanguard’s high yield bond fund (VWEHX) posted the biggest loss from the pack, down 0.34%.

• All sectors were down with one exception.

• Vanguard’s technology fund (VITAX) was the worst loser by far, down 8.45%, partly because investors pulled money from the sector after an incessant rally that lasted months.

• Vanguard’s materials sector fund (VMIAX) is the only gainer from the pack, up 0.37%.

• Foreign equities were all down except Japan.

• Fidelity’s China fund (FHKCX) lost the most these past two weeks, falling 3.55%.

• Meanwhile, T. Rowe Price’s Japan fund (PRJPX) is the only gainer with a rise of 0.95%, as the country benefited from its safe-haven status in the current selloff.

• Alternative assets were all down.

• PIMCO’s commodity real return strategy fund (PCRIX) shed 2.93% for the week, representing the worst performance.

• At the other end of the spectrum, Cohen & Steers Preferred Share Fund (CPXIX) was the best performer, with a decline of just 0.50%.

The past two weeks have experienced a brutal market selloff with all U.S. indices down. Foreign equities have also suffered, with the exception of Japan, which rose as it benefitted from its safe-haven status. Other safe-haven assets such as investment-grade bonds also gained. In sectors, only materials rallied. Among the worst losers are Chinese equities, high yield bonds, and the technology sector.

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Funds return data is for the period between August 28 and September 11.