Top Ten Mutual Fund Performers Of The First Half

The first half performance of mutual funds cannot be termed as very strong. Only four of the mutual fund categories analyzed posted above a 10% gain in the first half. The broader market performance also compares unfavorably with the same periods in 2014 and 2013. Amid high volatility, the Dow failed to end in the green in 1H 2015, while the S&P 500 managed to gain just 0.2%. The Dow was the only benchmark in the first quarter to end in the red, but S&P 500 joined the blue-chip index in negative territory in the second quarter. The S&P 500 thus ended its nine-quarter winning trend, but the Nasdaq managed to extend its winning streak to 10 quarters and hit an all-time high.

What Happened in First Half of 2015?

The year started with concerns related to lower global growth projections, a slump in oil prices, strengthening of the dollar and apprehensions about the timing of the Fed interest rate hike. Amid this, the GDP data had been of little help.

Beginning with the harsh winter and dismal releases, economic data has been mixed. Meanwhile, an increase in bond yields remained a cause for concern through May. By the first week of May, the yield on the benchmark U.S. 10-year note touched its highest level for 2015.

However recently, the retail and housing sector data have shown strength. The Fed officials meanwhile signaled a hike in interest rates, though at a slower than expected pace.

The major headwind for the market is the drama in Greece. Greek debt negotiations have guided markets right from the beginning of 2015. On the last day of 1H 2015, Greece defaulted on IMF repayments despite submitting a fresh two-year aid proposal to its creditors.

Synopsis of Benchmark & Fund Category Performance

Below we present the performance of the key benchmarks, i.e., the Dow Jones Industrial Average, Standard & Poor’s 500, Nasdaq Composite Index, and the fear-gauge CBOE Volatility Index (VIX).

Synopsis of YTD Fund Category Performance

As evident from the chart, volatility has been very pronounced. Losses in January was followed by gains in February and then ended in the red again in March. Though markets managed small gains in April and May, they were back to the negative zone in June. Focusing on June, the losses for the Dow and S&P 500 were the largest since January. Also, all three benchmarks ended in the red in June, repeating the event last seen in March. Except February, benchmarks have failed to post solid gains. In fact, it was February’s robust gains that had helped offset the losses in the first quarter and reduced the loss margin for 1H 2015. Except for the Nasdaq, we do not have a benchmark performance to be proud of.

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