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Quarterly Mutual-fund Report

After Bad 2008 And Poor 1st Quarter Of 2009, Most Mutual Funds Based In State Made Money In Spring

July 16, 2009|By Hanah Cho | Hanah Cho,

After a punishing 2008 and a poor first quarter, Maryland-based mutual funds bounced back in the spring as investors saw some good news amid the turbulence.

All but one of the 166 Maryland-based stock funds tracked by The Baltimore Sun made money in the three months ended June 30, according to a Sun analysis of data provided by Bloomberg News. The exception was Ellicott City-based Hussman Strategic Growth fund, which lost less than 1 percent in the quarter. For the first half of the year, though, the fund gained 6.2 percent.

Investors returned to the market partly because "stocks were really, really cheap," said John Coumarianos, a mutual fund analyst at Morningstar Inc.

That doesn't mean that investors should expect the turnaround to last, said Jeff Tjornehoj, a senior research analyst at mutual fund tracker Lipper Inc.

"I don't believe we'll have a repeat of this quarter any time this year," he added. "There's still a lot of caution out there."

Unemployment, for instance, edged up to a 26-year-high of 9.5 percent in June, dashing hopes that the economy could be getting back on track.

Investors "know the stock market will be there tomorrow," Tjornehoj said. "They're worried that their job won't."

The average U.S. diversified stock fund gained 17 percent in the second quarter and 6.5 percent in the first half of the year, according to Lipper.

In contrast to the past several quarters, every equity fund category posted gains, except for the short-bias fund, which gambles on the market falling, according to Lipper. Legg Mason's star stock picker Bill Miller, for instance, appeared to have rebounded in the second quarter after several years of dismal performance.

Miller's Opportunity Trust fund gained 46 percent in the quarter, one of the largest gains among U.S. stock funds. In a previous interview, Miller said the fund was positioned for a market recovery.

In total, investors poured $136 billion into bond and stock mutual funds in the second quarter, the best three-month period for in-flows since the first quarter of 2007, according to Strategic Insight, a mutual fund research firm.

After faltering during the latter part of last year, world equity funds showed strong returns, especially the Latin American funds, with a 44 percent retur,n and emerging markets funds, posting a 37 percent return.

Maryland-based international funds showed similar returns, with the T. Rowe Price Emerging Europe & Mediterranean Fund posting the best performance at nearly 59 percent. The fund also had the largest gain among all Maryland-based stock funds.

"We had a big recovery in a number of more risky markets and that really kicked in toward the end of February and came mostly in the second quarter," said Leigh Innes, the fund's portfolio manager based in London.

The fund invests in companies in countries such as Russia, Turkey, Israel and Egypt, and has large holdings in energy and consumer staple firms, including discount food retailers that are well positioned in any market environment, Innes said.

"We went through quite turbulent times," Innes said. "We are still trying to pick companies that will come out of a crisis more strongly. There were some names during the crisis that I eliminated that didn't meet the criteria. I tried to focus on the key names that would come out of the turbulent times that had strong balance sheets ... and improve margins over time."

Equity funds invested in specific market sectors also fared well, with returns ranging from 6.6 percent for gold-oriented funds to 33.9 percent for international real estate funds, according to Lipper.

The standout among Maryland sector stock funds was the T. Rowe Price Real Estate fund, with a 35 percent return.

Of the 65 Maryland-based bond funds, 56 made money in the second quarter.

The leader was Legg Mason Investment Grade Income fund, which gained 28.7 percent.

Best and worst 2nd-quarter performers


Ticker Name 2nd Qtr. YTD

TREMX T Rowe Price Emerg Eur & Med 58.824 55.769

PRASX T Rowe Price New Asia 55.237 55.237

LGOAX Legg Mason Opportunity Tr-A 46.336 N/A

PRLAX T Rowe Price Latin America 46.251 47.602

LMOPX Legg Mason Opportunity Tr-C 46.220 31.202


CMVAX Calvert Mid Cap Value-A 11.345 2.527

CMVCX Calvert Mid Cap Value-C 11.122 2.096

RYSTX Rydex Hedged Equity Fund-H 2.928 -3.861

RYMSX Rydex Absolute Return Str-H 1.001 -4.541

HSGFX Hussman Strategic Growth Fd -0.764 6.214


LMIGX Legg Mason Inv Grade Inc-P 28.662 20.739

PRHYX T Rowe Price High Yield-Inv 19.530 25.236

PREMX T Rowe Price Emerging Mkt Bd 13.888 17.704

FYAIX Access Flex High Yield Fd-Iv 13.706 -4.024

FYAQX Access Flex High Yield Fd-A 13.619 -4.140


PRTIX T Rowe Price Us Treas Intmed -3.002 -2.685

PRULX T Rowe Price Us Treas Long -6.302 -10.126

RYABX Rydex Series Govt Long Bd-A -14.548 -28.404

RYCGX Rydex Series Govt Long Bd-C -14.671 -28.621

GVPIX Profunds Us Government Pl-In -14.990 -29.642


TRREX T Rowe Price Real Estate Fd 35.467 -9.560

PVRAX Pnc Divers R/Estate-A 35.354 -12.609

PDRCX Pnc Divers R/Estate-C 35.254 -12.691

TRGRX T Rowe Price Gl Real Est Fd 33.245 4.014

TISHX Dws Communications Fund-A 31.899 31.368


RYRTX Rydex Series Retail Fd-A 9.157 15.709

RYRCX Rydex Series Retail Fd-C 8.965 15.220

SUHCX Dws Health Care Fund-C 8.860 1.796

RYMNX Rydex Series Precious Mtl-A 7.011 17.658

RYZCX Rydex Series Precious Mtl-C 6.803 17.208

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