Page 25 - ARUBA TODAY

BUSINESS Monday 2 october 2017
A25

Full steam ahead: Funds of all types rose again last quarter

By STAN CHOE funds will likely offer more ing. Rates began leaping returned 0.6 percent for the year, but it jumped to a 5.1
By AP Business Writer modest returns in the fu- after November’s election quarter through Wednes- percent return in the third
NEW YORK (AP) — Utopia is ture, analysts say. Stock on speculation that faster day. That’s more modest quarter, as of Wednesday.
still in effect for fund inves- President Donald Trump re-
tors. cently unveiled his hopes
Funds of all types again for cutting tax rates on U.S.
powered higher in the businesses, and smaller
third quarter, as stocks and companies may get an
bonds around the world even bigger benefit than
rose in unison. Not only did their larger rivals.
investors get strong returns — Foreign funds led the
from their funds, they also way.Finally, economies
got them with remarkably around the world seem to
few headaches along the be heading in the same up-
way. ward direction. From Latin
Consider the largest mu- America to Europe to Asia,
tual fund by assets, Van- economic indicators are
guard’s Total Stock Market improving, and their stock
Index fund, which sits at the markets are too. Many of
heart of many 401(k) and these markets have also
other accounts. It returned been lagging behind their
4 percent for the quar- U.S. counterpart for years,
ter, as of Wednesday. It’s which means analysts see
the eighth straight quarter them as more affordable.
where the fund has made Latin American funds had
money, and the 19th in the some of the quarter’s most
last 21. eye-popping gains. Bra-
The usual trade-off that zilian stocks jumped on
investors accept for the In this Tuesday, Oct. 25, 2016 photo, a miniature reproduction of Arturo Di Modica’s “Charging expectations for better
chance to make big mon- Bull” sculpture sits on display at a street vendor’s table outside the New York Stock Exchange, in corporate earnings and a
ey in stocks is the possibil- lower Manhattan. The good times kept rolling for investors in the third quarter of 2017. Funds of all more stable political en-
types delivered yet more gains during the summer, after stocks and bonds around the world rose
ity of big drops along the in unison. Not only were the returns strong, they were also remarkably steady. vironment. Fidelity’s Latin
way. But only twice during (AP Photo/Mary Altaffer) American funds surged
the quarter did investors to a 17.2 percent return in
have to stomach a day prices are higher than economic growth and in- than in prior quarters, but the quarter, as of Wednes-
where the fund lost more usual, relative to corporate flation were on the way, it’s much better than the day. That’s a better perfor-
than 1 percent. Compare profits, which makes them and the 10-year Treasury 3.2 percent loss it recorded mance than it’s had in six
that with two years ago, look more expensive. Bond yield jumped to 2.60 per- in last year’s fourth quarter. of the last seven full years.
when investors had to deal funds, meanwhile, face the cent from 1.85 percent in Funds that invested in risk- Chinese stocks were also
with a dozen such days in challenge of an expected a little more than a month. ier bonds did even better strong last quarter, which
the third quarter. rise in interest rates, which Rising rates mean newly is- during the quarter. helped funds that focus
Such steadiness made it would cause their prices to sued bonds pay more in — Stock funds were strong broadly on emerging mar-
an even easier decision fall.Of course, many ana- interest, and that in turn again, and smaller-stock kets add to their year-to-
for investors to hold on to lysts were saying the same makes the older, lower- funds closed the gap. date gains. These funds
their mutual funds and thing at the start of this yielding bonds in funds’ Businesses are making were hit hard last year by
exchange-traded funds, year and even a year be- portfolios less attractive bigger profits again, and fears that Trump’s White
which proved to be anoth- fore that, only to see funds and undercuts their prices. a parade of better-than- House win would lead to
er good bet this past quar- continue to do well. But reality has been the expected earnings reports less global trade. Emerging
ter. Roughly 95 percent of Here’s a look at some of opposite of expectations from companies during markets have also often
mutual funds tracked by the trends that shaped the this year, and the yield on the quarter helped to lift all struggled in the past when
Morningstar had positive third quarter for fund inves- the 10-year Treasury hit its kinds of stock funds. the Federal Reserve was
returns for the three months tors: low point for the year dur- Funds that focused on the raising interest rates.
through Wednesday. Even — Bond funds were resil- ing the third quarter, at a smallest stocks were no- But the dollar’s value has
categories of funds that ient.Heading into this year, shade above 2 percent. tably strong, after lagging weakened this year, which
struggled earlier in the many investors were brac- The drop in yields pushed other stock funds earlier helps emerging markets.
year, such as energy stock ing for losses from their up the price of bonds in in the year. The DFA USA Oppenheimer’s Devel-
funds, did well from July bond funds, even though funds’ portfolios, and most Small Cap fund is one of oping Markets fund, the
through September. they’re supposed to be the bond funds offered posi- the largest that focuses on largest actively managed
Just don’t assume utopia safe parts of their portfolios. tive returns last quarter. smaller stocks, for exam- fund focused on emerging
will continue. After their The fear sprung from ex- The largest bond fund by ple. It returned a little less markets, returned 7.5 per-
phenomenal run in recent pectations that interest assets, Vanguard’s Total than 1 percent in each of cent for the quarter as of
years, stock and bond rates would keep jump- Bond Market Index fund, the first two quarters of the Wednesday.q