ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, July 3, 1996 TAG: 9607030075
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
DATELINE: NEW YORK
SOURCE: Associated Press
Despite sharp price drops in the last few weeks, funds investing in small, growth companies were the standout performers among stock mutual funds in the first half of 1996.
The average small-company growth fund returned 7.93 percent in the second quarter, from April through June, and 15.12 percent in the first half of the year, research firm Lipper Analytical Services Inc. reported Tuesday.
But Lipper noted that the gains would have been a lot stronger had it not been for a drop of almost 4 percent in June, when several technology stocks and other small growth issues abruptly tumbled.
In its midyear report on stock-fund performance, Lipper said the average gain among 2,263 stock funds of all types for the first half was 10.47 percent, assuming reinvestment of dividends.
Even though that represented a pullback from a peak of 13.72 percent as of May 23, ``the general equity gain is still at the high end of historical returns,'' said A. Michael Lipper, the Lipper firm's president.
Lipper suggested that stocks and stock funds may soon see further periods of correction, or temporary pullback, and that such a flat or declining performance for a while would probably be healthy.
He said he was urging long-term investors to hold on through whatever market swings occur in the near term.
``We have encouraged investors for some time to dollar-cost average and to hang on to their equity fund investments,'' he said.
``If the market undergoes a long-expected correction, most investors will still be better off riding out the decline in order to be fully invested for the next upswing. On the other hand, if the market continues to rise, investors will surely want to participate.''
In the performance rankings for major stock-fund categories, capital appreciation funds ranked just behind the small-growth category with an 11.50 percent first-half return, closely followed by ``mid-cap'' funds investing in medium-size companies, up 11.35 percent, and growth funds, up 10.08 percent.
The weakest sector was equity income funds, up 7.65 percent, as rising interest rates in the bond market restrained the progress of many stocks followed by income-conscious investors.
World equity funds posted an average return of 10.35 percent, almost matching the overall gain of the average domestic stock fund. Latin American funds were the standouts in the international arena, climbing 23.09 percent.
Among specialized U.S. stock funds, natural resources funds set the pace with a 17.09 percent first-half gain. Utility funds brought up the rear, returning just 3.49 percent.
One notable change of direction occurred in gold funds, which started off the year with a strong gain but then backtracked. Gold funds lost 6.52 percent in the second quarter, trimming their first-half gain to 14.82 percent.
LENGTH: Medium: 58 lines ILLUSTRATION: GRAPHIC: Chart by AP.by CNB