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The Honolulu Advertiser
Posted on: Tuesday, April 17, 2001

S&P gains obscured by tech losses

The Arizona Republic

Even with the stock market having entered bad territory, there have been some bright spots. Not all stocks have been decimated.

"Much of the selloff in the past year has been technology-related," said Sherry Cooper, global economic strategist for Harris Bank in Phoenix. Stripping away tech, two-thirds of the stocks in the S&P 500 have gained in the past year, she said.

Here's a look at some mutual fund categories that have fared reasonably well of late:

• Value funds. These investments take the trophy for resiliency. Nearly all have gained ground, with small-stock value funds performing best, a 15.7 percent average rise from the past year.

The easiest way to define value funds is to note that they don't own growth stocks. Typically, value stocks trade at low price-earnings or price-book ratios. They have held up better lately in part because they lagged so badly during the growth-stock stampede of the late 1990s. That's when value funds endured their own bear market.

• Real-estate and natural-resources funds. Funds that track these two industry groups have posted double-digit gains over the past year.

Real estate stocks have been helped by lower interest rates, which encourage home sales. Also, the stocks tend to pay hefty dividends, which cushion market blows. Natural resources funds, with their ample energy holdings, have benefited from rising oil and natural gas prices.

• Emerging markets funds. OK, it's a stretch to claim that these funds, which invest in developing nations, have held up well over the past year. They haven't. Not with an average 12-month drop of 37.3 percent through March.

Yet most of that damage came last year. The funds were off just 6.4 percent on average over the past three months, well below the 13.1 percent average decline for domestic stock funds.