Most Stock Funds Recover, Beating 2007 Highs
While the Dow Jones Industrial Average is still about 1 percent below its October 2007 high, two-thirds of all stock mutual funds — 2,576 — have posted new highs since then, according to Lipper, which tracks the funds.
One reason: The Dow doesn't include reinvested dividends. If you include dividends, the Dow is up 14.8 percent from its 2007 peak. By contrast, the average diversified U.S. stock fund is up 10 percent since then.
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Some funds are showing spectacular gains since the Dow's 2007 top:
• T. Rowe Price New Horizons fund is up 47 percent. Small- and mid-cap stocks have outperformed the blue-chip Dow, and New Horizons, the granddaddy of all small-company stock funds, has ridden the small-cap wave.
• Precious-metals funds have glittered, gaining an average 108 percent as investors shunned stocks and sought refuge in the world's oldest form of money. During the worst bear market in stocks since the Depression, precious-metals funds gained 12.4 percent. And once the bear went into hibernation in March 2009, precious-metals funds soared.
For example, iShares Silver Trust, an exchange traded fund that invests in silver bullion, is up 122 percent, beating its sister fund, the iShares Gold Trust, which is up 115 percent during the same period.
Investors who sought refuge in international funds got clobbered in the bear market on the way down, and were slowed by the European debt crisis on the way back up.
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The average international large-cap value fund is down 22 percent from its October 2007 high. And funds that invest in China are 18 percent below where they were when the Dow made its all-time high.
A few popular U.S. funds, many of them run by star managers, remain well in the red. For example, CGM Focus fund, run by veteran manager Kenneth Heebner, is down 32 percent since October 2007. Other notable laggards:
• Brandywine, founded by star-manager-turned-political-activist Foster Friess, is down 31 percent.
• Legg Mason Value Trust, run by star manager Bill Miller until last April, is down 30 percent.
• Fidelity Magellan, once the largest stock fund in the world, is down 12 percent. The fund had $47 billion in assets in October 2007. It's down to $12 billion now, says Lipper.