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January Month-End Summary:
The New Year Takes Off on a Higher Note
fter a paltry closing for the market in December of last year, all major indices finished higher amidst a very eventful month marked by two consecutive interest rate cuts. The early part of the month witnessed the phenomenon known as "January Effect," where stock prices jumped higher following the heavy tax-loss selling that occurred in December. But the real catalyst that carried the markets into a positive close for the month was the emergency rate cut of 50 basis points on January 3rd, when the Fed met between official meetings to bring the Fed rate down to 6 percent. The NASDAQ jumped 14% higher on that trading session alone following the news. But a slew of worrisome pre-announcements and disappointing earnings results in mid month, weighted heavily on the markets and sent major indices on more tailspins, only to recover in the later part of the month, as the Fed made the second rate cut in January bringing the Fed rate to 5.50%.
Equity Funds
The picture for earnings announcements was very mixed, as bellwethers such as Hewlett Packard missed their earning estimates, while price-depressed Internet companies such as Ariba beat their earnings' targets. But even the bluest of blue-chips, including General Electric, made some cautionary comments about the near-term outlook for their revenues. The main problem surrounding GE and similar manufactures is the build up of inventory, as demand is suddenly slowing down after extended periods of rich business activities. Many of the Dow retail components, lead by Home Depot, similarly warned of the forward outlook for the rest of the year. The 104-year index, however, managed to inch 0.92% higher buoyed by its technology components.
In the broader market, the S&P 500 index also jumped 3.46%, lifting with it both the growth and the aggressive growth fund categories by 2.76% and 2.56%, respectively. And after posting one of the worst years ever, the tech-laden NASDAQ soared a much-needed 12.23% and technology-sector funds followed with an impressive 9.89% gain. But reversing course this month, financial-services funds, energy funds and healthcare & biotech funds, all finished on a very low note, as profit-taking in last month's astounding gains pulled their prices down. And instead of being in the black, utilities funds were in the blackout this month, as the California energy crisis was reflected in many of the utilities funds' portfolios. The funds, as a group, plunged 1.42% for the month after gaining over 4% last year.
Fixed-Income Funds
Still on a positive streak, the fixed-income market continued to post steady gains, as the interest rate environment is improving. Many fixed-income fund categories posted solid single-digit gains, led by the corporate high-yield category, which soared 6.18% for the month. In second place was the convertible fund category, which was able to capture the best of worlds, equity and bond, to record a gain of 4.20%.
International Funds
Not surprisingly, many international markets moved in tandem with the US market. Germany's Dax shot 5.62% higher, France's CAC gained 1.22% and the MSCI EAFE index rose a modest 0.06%. The average non-US equity fund garnered returns of 1.93%, while the emerging market fund category posted a very solid 11.66%, ranking it first in this month's list of performers.
DJIA
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NASDAQ
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S&P 500
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Preliminary Fund Category Returns
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Investment Category
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1 month
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3 Month
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1 Year
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Aggressive Growth
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2.56
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-10.72
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-8.37
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Asset Allocation - Domestic
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1.93
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-0.14
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4.40
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Asset Allocation - Global
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1.93
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1.75
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2.83
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Balanced - Domestic
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2.13
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0.63
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7.00
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Balanced - Global
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1.53
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1.60
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4.01
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Convertible
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4.20
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-1.52
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2.98
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Corporate - High Yield
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6.18
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2.70
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-2.73
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Corporate - Investment Grade
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1.82
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5.37
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10.93
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Emerging Market Equity
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11.66
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3.95
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-21.21
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Emerging Market Income
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5.43
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7.99
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15.71
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Equity Income
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1.12
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0.65
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8.83
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General Bd - Investment Grade
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1.74
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4.73
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11.07
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General Bd - Long
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1.91
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5.52
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12.74
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General Bd - Short & Interm
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1.56
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4.19
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10.01
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General Mortgage
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1.08
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3.67
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10.54
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Global Equity
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1.53
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-2.85
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-5.73
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Global Income
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1.86
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5.77
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6.00
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Growth - Domestic
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2.76
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-5.25
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-0.21
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Growth & Income
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2.19
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-0.66
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7.44
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Loan Participation
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0.13
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0.56
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5.34
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Mid Cap
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1.68
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-5.57
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8.84
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Multi-Sector Bond
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2.71
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4.97
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7.30
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Municipal - High Yield
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0.51
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2.38
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6.82
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Municipal - Insured
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0.61
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4.17
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12.98
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Municipal - National
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0.84
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3.59
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10.95
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Municipal - Single State
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0.63
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3.73
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12.11
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Non-US Equity
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1.93
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-1.08
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-13.03
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S&P 500 Index
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3.43
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-4.59
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-1.86
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Sector - Energy/Natural Res
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-3.11
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7.48
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29.96
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Sector - Financial Services
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-0.78
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5.93
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32.68
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Sector - Health/Biotechnology
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-7.76
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-7.79
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28.38
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Sector - Other
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3.74
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5.17
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5.86
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Sector - Precious Metals
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0.45
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14.26
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-7.88
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Sector - Real Estate
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0.92
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8.71
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28.21
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Sector - Tech/Communications
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9.89
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-20.66
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-27.44
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Sector - Utilities
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-1.42
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-3.97
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0.33
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Small Cap
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3.37
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-0.85
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8.29
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US Government - Long
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1.02
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4.90
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14.29
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US Government - Short & Interm
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1.10
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3.93
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10.59
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US Government/Agency
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1.55
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4.97
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12.74
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US Treasury
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0.81
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4.26
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12.28
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Final Numbers will be released on February 7th.
If you have any questions please call Ramy Shaalan at 301-545-4397.
About Wiesenberger
Wiesenberger, the country’s first mutual fund tracking service, has provided mutual fund data to financial professionals for more than 55 years. It is the leading provider of customized retirement, marketing and sales, and research software to both distributors and sponsors, including financial planning companies, wirehouses, broker/dealer firms, banks, mutual fund and insurance companies. Wiesenberger is a division of Thomson Financial, a US$1.2 billion provider of information services and work solutions to the financial and corporate communities worldwide. Through the widest range of products and services in the industry, Thomson Financial helps clients in more than 70 countries make better decisions, be more productive and achieve superior results. Thomson Financial is part of The Thomson Corporation, a leading e-information and solutions business with annual revenues of more than US$6 billion. The Corporation’s common shares are listed on the Toronto and London stock exchanges. For more information, visit
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