No surprises here as the back half of 2011 has been one of the most difficult periods in investment memory as stock picking or fundamental analysis (and to a lesser degree technical analysis) has been replaced by headline reading, politician listening, and intervention rumor (or reality) grabbing. With correlations off the charts and … especially difficult for U.S. investors …..gaps up or downs happening constantly due to Europe, both hedge funds and mutual funds have been whipsawed into a pretzel. (Today being a great example – yesterday closing on the low of the month, today gapping up and running 2%+!!!!) Let us hope 2012 gives us some trends that last 6-8+ weeks rather than 6-8 days or 6-8 hours.
Those funds which specialize in small and mid cap have done worse as their index (-8.4%) is down substantially more than the S&P 500 (-1.4%) [data obviously does not reflect today's big jump]
However there has been a big winner – good ole Treasury funds
- The average bond fund that invests in U.S. Treasury securities has soared 14.7% this year, as investors flocked to government securities for safety.
Via USA Today:
- The average diversified U.S. stock mutual fund has fallen 5.9% this year, vs. a 1.4% loss for the Standard & Poor's 500-stock index, says Lipper, which tracks the funds.
- Out of 8,036 funds, 7,399, or 92%, are showing a loss — and some are doozies.
- Stock funds tend to invest in midsize and small companies, which have lagged behind the S&P 500. The Russell 2000 small-cap index, for example, has fallen 8.4% this year.
- Thanks to the European crisis, international funds have been smacked even harder: The average large-company international fund has plunged 15.5%.
- Some specialized funds have tanked even more. Direxion Daily Real Estate Bear 3X, which uses futures and options to amplify performance up and down, plunged 57.7%.
- Continued market volatility has sent investors fleeing stock funds this year. Investors have yanked out $133 billion more than they have put in to stock funds this year, according to the Investment Company Institute, the funds' trade group.
Disclosure Notice
Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund's holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog
