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 are now more than 100 million people in the world who have been infected with the coronavirus. The U.S. is responsible for one quarter of the infections, followed by India with 10.6 million, Brazil with 8.8 million, and Russia with 3.7 million. On the bright side, the number of daily cases has been trending down globally for the first time since the pandemic started, largely thanks to a host of countries instituting new stay-at-home orders.

• In the U.S., Joe Biden was sworn in as President as Donald Trump’s efforts to overturn the election failed. Biden’s inauguration message was one of unity. Biden has quickly overturned some of Trump’s actions, including halting the construction of the wall across the Mexico border and rejoining the Paris climate accord designed to limit fossil fuel emissions. One issue that is likely to remain unchanged is the trade war with China. Biden is expected to continue Trump’s strong stance on the country by pushing for equal trading terms.

• Federal Reserve chairman Jerome Powell has strongly indicated that the U.S. Central Bank will continue its easy money policy until the economy has recovered substantially. At a webinar hosted by Princeton University, Powell said it is too early to talk about exiting the asset purchase program as the economy is far from reaching its goals. He also said the Fed will communicate its potential tapering of asset purchases well in advance.

• The Bank of Japan has maintained its easy monetary policy. The bank increased its expectations for growth for the next fiscal year from 3.6% to 3.9%. However, it warned that consumer sentiment remains depressed due to emergency measures taken by the government to cope with a surge in coronavirus cases.

• The European Central Bank is still confident that an economic recovery in the Eurozone will take place this year, despite fresh lockdown measures taken by a host of European governments against rising coronavirus cases. ECB President Christine Lagarde said she believes the recovery will take place but it will be delayed. The ECB kept its monetary stimulus unchanged to stimulate growth.

• U.S. retail sales declined for the second consecutive month in December, this time by 0.7%, as lockdowns across some states curtailed retail spending. Core retail sales fell even more abruptly, by 1.4%.

• Chinese GDP unexpectedly rose 6.5% in the last quarter of the year compared to the year-ago quarter, beating analysts’ expectations of 4.9%.

• Europe’s ZEW economic sentiment remains unexpectedly strong. The gauge tracking the sentiment of institutional investors and analysts rose from 54.4 to 58.3, a high not seen since September 2020.

• Europe-wide manufacturing purchasing managers’ index (PMI) remained in positive territory in January at 54.7, down from 55.2 in the prior month. However, services PMI continues to be in negative territory, at 45, for the fifth month in a row.

• 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 rally continued these past two weeks, although it was not very strong.

• Vanguard’s small-cap index fund (VSCIX) is up 2.46%, by far the strongest performance from the pack. The rally may have been triggered by a few small-cap names like Gamestop that surged through the roof due to a short squeeze triggered by a group of retail investors on Reddit.

• Vanguard’s mid-cap index fund (VMCIX) is up just 0.34%, the worst performance from the bunch.

• Fixed income securities mostly rose.

• Vanguard’s investment-grade bonds fund (VWESX) is by far the best performer with an advance of 0.5%, after trailing the list for a few weeks.

• Vanguard’s junk bonds fund (VWEHX) is the only faller, down 0.33%, as investors ditched risk and embraced safety.

• Sectors posted a mixed performance.

• Vanguard’s real estate sector fund (VGSLX) is the best performer from the pack with an advance of 3.24%.

• At the other end of the spectrum is Vanguard’s materials sector fund (VMIAX), which declined 2.75%, after taking first spot in the list last time.

• Foreign equities were also mixed.

• Fidelity’s Chinese fund (FHKCX) is again the best performer from the pack, climbing 6.35%, as better-than-expected GDP data boosted sentiment.

• Fidelity’s Latin American fund (FLATX) continued to trail the list again, with a loss of 3.33%.

• Alternative assets’ performance remained mixed.

• Vanguard’s real estate index fund (VGSLX) gained 3.2%, the best performance by far.

• Meanwhile, Pimco’s emerging markets currencies fund (PLMIX) shed 0.37%, the only loser from the pack.

Small-cap stocks have rallied these past two weeks along with investment-grade bonds and the real estate sector. Chinese shares have also posted impressive gains thanks to strong economic output data. At the other end of the spectrum, Latin American shares, the materials sector, and junk bonds all posted losses.

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Fund returns data are for the two-week period between January 8, 2021 to January 22, 2021.