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.

 

• There is a second wave of coronavirus infections in Europe, with new daily cases dramatically rising in the UK, Russia, Spain, France, and other countries. Some European countries have started taking light measures to restrict the movement of people and avoid as much economic damage as possible. In the U.S., new COVID-19 infections have slowed down but remain at an elevated level.

• The U.S. Federal Reserve has left interest rates unchanged at near-zero and expects the rates to stay at this level at least until 2023, or when inflation will stay above 2% for some time. The U.S. economy has recovered faster from the pandemic than the Central Bank predicted, but key indicators such as unemployment remain well below pre-pandemic levels, while the second wave of infections poses a risk to the recovery. The Fed is still debating ways to boost the economy and is not thinking yet to withdraw the unprecedented stimulus.

• U.S. retail sales growth has slowed in August month-over-month to 0.6%, disappointing analysts’ expectations of 1.1% growth. Core retail sales, which exclude volatile auto sales, were up 0.7% compared with 1% expected by analysts.

• The Bank of Japan kept its ultra-loose monetary policy intact and sounded an upbeat tone about the economic recovery, after previously raising alarms about the negative effect of the coronavirus pandemic.

• The Bank of Japan monetary policy meeting was overshadowed by the appointment of a new Prime Minister. Yoshihide Suga will take over from long-time leader Shinzo Abe, who stepped down for health reasons. Suga is expected to continue Abe’s policies of shareholder primacy and encouraging foreign investment.

• The Bank of England maintained low interest rates unchanged but signaled it is open to further boosting the economy. The Bank of England suggested the economy performed better than expected, but one idea floating from one of the nine policymakers is negative interest rates to boost lending.

• A host of European purchasing managers’ indexes (PMIs) in the services sector, including France and Germany, fell into contraction territory again in September, as some countries imposed new restrictions to combat the second wave of the pandemic. Manufacturing PMIs are still in positive territory in the Eurozone and improved compared to August.

• In the U.S., both manufacturing and services sentiment scores are above 50, indicating expansion, with services PMI positioned slightly better.

• 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 broad market continued to fall these past two weeks, after a brutal selloff in the prior two-week period.

• Vanguard’s large-cap index fund (VFIAX) was the weakest performer from the pack with a fall of 1.2%.

• At the same time, Vanguard’s mid-cap index fund (VMCIX) was the best performer, declining by just 0.44%.

• All fixed income indexes were down, with two exceptions that posted flat gains.

• U.S. Treasuries fund (VFISX) and U.S. municipal bonds fund (VWITX) posted the best performance from the pack with flat gains.

• Meanwhile, Vanguard’s high-yield bonds fund (VWEHX) sold off the most, falling by 1.37%.

• Sectors posted a mixed performance.

• T. Rowe’s communications fund (PRMTX) was up 1.6% for the past two weeks, representing the best performance from the pack.

• Vanguard’s energy sector fund (VGENX) recorded the worst performance by far, down nearly 6.4%.

• Japan was the only gainer from foreign equities.

• As a new lockdown looms over Europe, its shares as represented by the Vanguard European Stock Fund (VEUSX), were the worst performers among major foreign equities, losing 4.9%.

• At the other end of the spectrum is Japan, wherein T. Rowe Price’s Japan Fund (PRJPX) gained more than 3.1% for the past two weeks, thanks to its safe-haven status and leadership transition.

• Alternative assets were all down.

• Cohen and Steers Preferred shares fund (CPXIX) shed 1.14%, the smallest loss from the pack.

• Vanguard’s real estate equities fund (VGSLX) was the worst performer, with a drop of nearly 3.2%.

The broad market has continued to post losses, along with the energy sector, high yield bonds, and real estate. European shares were among the worst performers as the continent is on the verge of another lockdown as new coronavirus cases spiked abruptly. Japanese shares were among the few gainers as they benefited from their safe haven status, along with communications equities, which have been boosted by the imminent launch of 5G.

Be sure to sign up for your free newsletter here to receive the most relevant updates.