Oil, gas mutual funds see 3d-quarter losses
Precious metals also dip, but value funds gain ground
US oil and gas stock mutual funds are set for their worst third-quarter performance in four years, but emerging markets and rate-sensitive sectors such as real estate and financials are likely to see strong gains.
Value-style funds are still outperforming growth-oriented ones, and while small-capitalized funds are losing ground, investors are not bounding into large-caps. Instead, many choose multicap funds that invest in companies of all sizes.
Preliminary data from fund research firms Lipper Inc. and Morningstar Inc. show that a 20 percent slide in oil prices from mid-July and a 50 percent dive in natural gas prices since Aug. 1 have pushed oil and gas funds into the red in the third quarter after a bull run in the prior six months.
Funds focusing on precious metals also suffered big losses, with gold down nearly a fifth from its mid-May peak.
The drop in commodity prices comes as equity markets are firming. The Dow Jones industrial average traded above its all-time closing on Thursday morning and the S&P 500 index is up 5.2 percent this quarter.
``It's hard to not look at commodities and the reversal that they had," said Todd Trubey, analyst at Morningstar.
``They've been some of the hottest areas of the market for the last five years. So for them to turn around and reverse course is significant," he said.
On average, Morningstar estimated 161 natural resources funds lost 6.1 percent in the 13 weeks to Sept. 26. The category's biggest quarterly loss prior to this was in the third quarter of 2002, when it lost 15.8 percent.
Gold-oriented funds, according to Lipper, stumbled 9 percent on average in the third quarter to Sept. 21, their losses second only to the 10.7 percent drubbing received by natural resources funds.
Gold funds were still up 11.7 percent in the year to Sept. 21 and natural resources funds were up 2 percent, indicating strong prior quarters.
Tom Roseen, senior research analyst at Lipper, which is a unit of Reuters Group Plc, said the poor showing of natural resources hurt performance of many large-cap, mid-cap, and multicap funds, which owned energy firms. But global and international multicap funds made a comeback, he said.
``Investors are still not able to really put their finger on whether small caps are out of favor and large cap is in. So what they are doing is they are going to this `go anywhere' category," Roseen said.
