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February Month-End Summary: It's Not Over Yet
he euphoria of the "January effect" wore off quickly, and February performance was a grim reminder that the economy and the markets are likely to get worse before they get better. Memories of the two January rate cuts by the Federal Reserve Board faded fast as the bad news on corporate earnings and job layoffs kept up a steady drumbeat throughout the month. Economic indicators announced in February were downbeat, adding to the dark mood; the Consumer Confidence Index reached its lowest point since June 1996, orders for big-ticket U.S. manufactured goods plunged to their lowest level in 19 months, and sales of new single-family homes fell nearly 11%. Hopes that the Fed would intervene with another rate cut were dashed on the last day of February, and the bad news was compounded by Chairman Alan Greenspan's gloomy comments on the economy.
Equity Funds
The major equity indexes reflected the bad news. After a good January, the S&P 500, the NASDAQ Composite, and the Dow Jones Industrial Average all lost ground in February, landing in the red for the first two months of 2001. Technology stocks again took the hardest hit, causing the NASDAQ to lose 22.39% of its value, the third-worst month ever for the technology-laden index. The S&P 500 was down 9.23%, while the DJIA dropped 3.6%.February, not April, may turn out to be the cruelest month of 2001 for equity fund investors. On average, U.S. equity funds lost 6.88%. All major equity categories were in the red for the month, giving back the gains amassed in January and then some. Aggressive growth funds and growth funds sported double-digit declines, losing 14.23% and 10.29% respectively. Equity sector funds also took a big hit. Resuming the pattern set late last year, technology/communications funds blazed the downward trail, losing 26.79% for the month and down 19.33% year to date. The bright spot, as it usually is when equity markets are taking a pounding, was precious metal funds. This sector gained 4.38% in February and was up 14.1% over the past three months.
Fixed-Income Funds
The picture was brighter for fixed-income investors. Although interest rates were unchanged in February, the bond markets performed well in a climate favoring additional rate cuts in the near future. Returns were not as high as in January, but all plain-vanilla fixed-income categories posted gains in February and were in the black year to date. Long U.S. government funds were the top performers, returning 1.24% for the month. Riskier fixed-income groups had a mixed performance; convertible bond funds, for example, lost 7.1%, but corporate high-yield bond funds managed to squeak out a 0.4% gain. Excluding convertibles and mixed funds, the average U.S. fixed-income fund gained 0.62% for the month.
International Funds
The turmoil in the U.S. markets also contaminated international markets. The MSCI EAFE Equity Index was down 7.45%, and all international and non-U.S. equity and fixed-income categories, except global income funds, stumbled in February, for an average loss of 5.23%. The biggest loser was global equity funds, which dropped 9.34% for the month and are down 7.6% year to date.
Final Fund Category Returns
|
Fund Category
|
1-mo
|
3-mo
|
YTD
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
12-mo Yield
|
|
Aggressive Growth
|
-14.23
|
-9.57
|
-11.86
|
-29.70
|
6.85
|
10.34
|
12.53
|
0.46
|
|
Asset Allocation - Domestic
|
-4.60
|
-0.69
|
-2.79
|
-1.61
|
5.35
|
9.91
|
11.62
|
2.77
|
|
Asset Allocation - Global
|
-4.54
|
0.10
|
-2.49
|
-2.61
|
3.24
|
5.15
|
7.78
|
3.34
|
|
Balanced - Domestic
|
-4.19
|
0.34
|
-2.19
|
2.55
|
5.55
|
10.28
|
10.75
|
3.02
|
|
Balanced - Global
|
-5.70
|
-2.67
|
-5.12
|
-1.51
|
5.88
|
9.18
|
10.44
|
2.19
|
|
Convertible
|
-7.10
|
2.00
|
-3.23
|
-11.26
|
7.52
|
11.23
|
13.35
|
3.43
|
|
Corporate - High Yield
|
0.40
|
8.88
|
6.78
|
-3.09
|
-1.15
|
4.10
|
9.58
|
9.70
|
|
Corporate - Investment Grade
|
0.79
|
4.84
|
2.78
|
11.23
|
5.21
|
6.12
|
7.73
|
5.35
|
|
Emerging Market Equity
|
-7.91
|
6.38
|
2.87
|
-30.85
|
-4.47
|
-2.59
|
1.28
|
0.19
|
|
Emerging Market Income
|
-2.09
|
7.36
|
3.30
|
7.81
|
2.83
|
11.42
|
|
9.27
|
|
Equity Income
|
-4.48
|
0.68
|
-3.40
|
10.59
|
4.27
|
11.73
|
12.56
|
1.97
|
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General Bd - Investment Grade
|
0.83
|
4.35
|
2.55
|
10.97
|
5.39
|
6.11
|
7.27
|
5.63
|
|
General Bd - Long
|
0.93
|
5.09
|
2.88
|
12.51
|
5.80
|
6.71
|
8.47
|
5.75
|
|
General Bd - Short & Interm
|
0.72
|
3.92
|
2.31
|
9.93
|
5.71
|
6.03
|
6.42
|
5.64
|
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General Mortgage
|
0.66
|
3.19
|
1.80
|
10.54
|
5.63
|
5.99
|
6.54
|
5.65
|
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Global Equity
|
-9.34
|
-5.02
|
-7.60
|
-18.31
|
6.13
|
9.96
|
10.02
|
0.71
|
|
Global Income
|
0.13
|
5.29
|
2.04
|
5.26
|
2.30
|
4.58
|
6.31
|
6.02
|
|
Growth & Income
|
-5.81
|
-0.48
|
-3.81
|
4.38
|
5.76
|
13.15
|
13.67
|
0.88
|
|
Growth - Domestic
|
-10.29
|
-5.49
|
-7.84
|
-12.28
|
7.21
|
13.47
|
13.80
|
0.43
|
|
Loan Participation
|
0.49
|
1.34
|
0.97
|
5.64
|
5.27
|
5.79
|
6.28
|
7.69
|
|
Mid Cap
|
-9.92
|
-1.87
|
-8.35
|
-10.75
|
11.66
|
14.81
|
15.25
|
0.21
|
|
Multi-Sector Bond
|
0.53
|
5.92
|
3.27
|
6.53
|
3.24
|
5.77
|
7.81
|
6.74
|
|
Municipal - High Yield
|
0.59
|
2.73
|
1.16
|
6.23
|
1.66
|
4.45
|
6.28
|
5.09
|
|
Municipal - Insured
|
0.30
|
3.71
|
0.92
|
11.76
|
4.25
|
4.98
|
6.52
|
4.18
|
|
Municipal - National
|
0.37
|
3.45
|
1.21
|
10.17
|
3.79
|
4.75
|
6.20
|
4.26
|
|
Municipal Single State
|
0.39
|
3.50
|
1.04
|
11.13
|
3.82
|
4.86
|
6.31
|
4.19
|
|
Non-US Equity
|
-7.19
|
-3.15
|
-5.48
|
-23.91
|
4.26
|
5.16
|
7.53
|
0.82
|
|
S&P 500 Index
|
-9.22
|
-5.72
|
-6.12
|
-9.01
|
6.55
|
15.39
|
15.02
|
0.84
|
|
Sector - Energy/Natural Res
|
0.36
|
12.70
|
-2.78
|
29.45
|
6.50
|
9.88
|
9.32
|
0.71
|
|
Sector - Financial Services
|
-3.97
|
5.47
|
-4.75
|
39.89
|
6.93
|
17.79
|
21.48
|
0.50
|
|
Sector - Health/Biotechnology
|
-3.79
|
-6.10
|
-11.28
|
6.30
|
18.31
|
16.68
|
17.54
|
0.09
|
|
Sector - Other
|
-4.47
|
3.08
|
-0.77
|
6.48
|
5.41
|
9.64
|
13.77
|
0.36
|
|
Sector - Precious Metals
|
4.38
|
14.10
|
4.84
|
-3.34
|
-8.31
|
-16.19
|
-4.47
|
0.79
|
|
Sector - Real Estate
|
-1.62
|
5.60
|
-0.73
|
28.21
|
0.70
|
9.61
|
8.47
|
4.62
|
|
Sector - Tech/Communications
|
-26.79
|
-21.36
|
-19.33
|
-56.40
|
17.33
|
18.08
|
20.30
|
0.14
|
|
Sector - Utilities
|
-3.00
|
-0.55
|
-4.65
|
-2.15
|
9.79
|
13.51
|
12.55
|
2.57
|
|
Small Cap
|
-8.31
|
3.21
|
-5.35
|
-10.48
|
5.45
|
11.65
|
14.18
|
0.25
|
|
US Government - Long
|
1.24
|
4.26
|
2.32
|
14.13
|
6.17
|
6.54
|
7.64
|
4.49
|
|
US Government - Short & Interm
|
0.77
|
3.43
|
1.94
|
10.58
|
5.64
|
5.81
|
6.33
|
5.14
|
|
US Government/Agency
|
0.83
|
3.73
|
1.98
|
11.97
|
5.53
|
6.01
|
6.77
|
5.20
|
|
US Treasury
|
1.09
|
3.65
|
1.94
|
12.23
|
6.40
|
6.94
|
8.49
|
4.80
|
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