NEW YORK - Stock mutual funds had a stunning second quarter, turning in their best three-month results in 31/2 years. For the most part, funds scored double-digit positive returns, rallying with the rest of Wall Street on strong earnings and economic reports and a swift end to the war in Iraq.
"The market sentiment just really turned around," said Martin Vostry, research analyst at Lipper Inc., a New York company that tracks mutual funds.
On average, equity mutual funds posted a positive second-quarter return of 18.1 percent, Vostry said. The last time stock funds had a larger quarter return was the fourth quarter of 1999, when they notched a return of 21.6 percent.
Of Lipper's 41 stock fund categories, all but one had positive returns for the second three months of 2003, according to preliminary results released Friday. And, of the 40 types of funds with positive returns, 38 of them were well in the double digits.
That's a huge turnaround from the first quarter, when 33 of the fund categories sank.
The biggest returns came from telecommunication funds, with a positive return of 25.5 percent, and science/technology funds, with a positive return of 25.3 percent, according to Lipper. These funds, of course, had a steeper bottom to rebound from.
Among U.S. diversifed equity funds, the best results came from funds that concentrate in small companies as investors were betting on an economic turnaround. Smaller companies often see more robust growth more quickly than larger companies with bloated operations.
