For investors in local mutual funds, 2009 was practically a can't-lose year - coming as it did on the heels of can't-win 2008.
All but a handful of the 224 mutual funds managed in Maryland posted gains last year, according to data provided by Bloomberg News. It was a nationwide trend: As fears of economic depression receded, investors drove up values for funds across the board, whether they invested in gold stocks or focused on the battered real estate sector.
Every mutual fund index was up last year except the index of funds betting on market downturns by taking almost entirely "short" positions, according to mutual fund tracker Lipper Inc.
"It's too bad we had to endure 2008 to get these returns, but that's what most of us did," said Jeff Tjornehoj, a senior research analyst at Lipper. "If you lose 50 percent, you need a 100 percent return ... just to get back to where you started."
Even after last year's rally, more than 80 percent of stock and stock sector funds based in Maryland were still down from where they were three years ago - a reflection of how beaten down stocks were in 2008, when financial company failures prompted selling frenzies.
People who invested in Maryland bond funds and held on had better luck: All were in the black at the end of last year, compared with three years earlier.
Science and technology funds had a particularly good 2009, up 60 percent as a group, according to Lipper. Funds investing in basic materials rose 65 percent as investors bet on recovery. And international funds did well, especially those focusing on Latin America - that fund index gained 113 percent, according to Lipper.
It also was a comeback year for famed money manager Bill Miller, whose Legg Mason Capital Management Value Trust beat the Standard & Poor's 500 index for a record-setting 15 years in a row before breaking that streak in 2006. After two years of losses, his fund gained nearly 41 percent in 2009, compared with the S&P's 23 percent return. Still, the fund's $36.44-a-share price at the end of 2009 was well below the more than $58 a share investors were getting three years earlier.
Several of the top-performing funds in Maryland last year more than doubled in value. T. Rowe Price's Emerging Europe & Mediterranean Fund posted a 125 percent gain last year - to $17.56 a share - after plummeting from $37.36 a share to $7.80 a share in 2008. The fund focuses on Eastern Europe, especially Russia.
"The Russian market had a particularly tough time in 2008, and from February in 2009 started to recover quite sharply," said Leigh Innes, the fund manager.
She said her fund benefited from the upturn by "sticking to our convictions and some of the core Russian positions." The fund held on to shares in companies that seemed poised to come through the crisis well, and it also used the downturn as a buying opportunity.
"Some of the valuations in my market had got to extremely low levels," Innes said. Looking forward, she added, "There's still good possibilities."
Sam Peters, whose Legg Mason Capital Management Special Investment Trust fund rose almost 80 percent last year, said the fear in the stock market was so high in 2008 that "you were getting a Great Depression, really, priced into a lot of assets." As investors ran from stocks, his mid-cap value fund dropped from more than $32 a share to under $15. But that set the stage for 2009.
"We were able to do exactly what we were trying to do - take advantage of what I think will be a generational valuation opportunity," he said. His strategy was "just stepping back and trying to be reasonable and rational during a very dramatic time."
One of his fund's top investments was in Marvell Technology Group, a semiconductor company. Its stock price fell by more than 50 percent in 2008, but the company paid off its debt and was "generating a ton of cash, even during the downturn," Peters said. It didn't take more than simple math for him to feel confident that the firm was very undervalued. Marvell's shares rose from $6.67 to $20.75 last year.
It's not as easy to find good deals now, Peters said. "We're back to a market where you have to stock pick," he said.
Said Tjornehoj, the Lipper analyst: "We don't have panic, and we don't have glee."
Top stock sector funds
Ticker Name 2009
PRGTX T Rowe Price Global Technlgy 80.28
RYELX Rydex Series Electronics-A 70.29
RYSCX Rydex Series Electronics-C 69.40
PRMTX T Rowe Price Media & Telecom 68.52
PRSCX T Rowe Price Sci & Tech 67.83
Bottom stock sector funds
Ticker Name 2009
RYCNX Rydex Series Transport-C 14.05
RYUTX Rydex Series Utilities-A 13.77
RYCUX Rydex Series Utilities-C 12.89
RYBKX Rydex Series Banking FD-A -3.93
RYKCX Rydex Series Banking FD-C -4.03
Top bond funds
Ticker Name 2009
HYB New America High Income Fund 127.56
PRHYX T Rowe Price High Yield-Inv 49.19
PREMX T Rowe Price Emerging Mkt BD 34.96
PRFHX T Rowe Price Tx Fr High Yield 31.44
PRPIX T Rowe Price Corp Income FD 22.10
Bottom bond funds
Ticker Name 2009
PRTIX T Rowe Price US Treas Intmed -1.36
PRULX T Rowe Price US Treas Long -10.90
RYABX Rydex Series Govt Long BD-A -31.49
RYCGX Rydex Series Govt Long BD-C -31.96
GVPIX ProFunds US Government PL-IN -34.00