A quarter investors would prefer to forget
— -- The best thing about the past three months: They're over.
The average diversified stock mutual fund fell 17.4% in the third quarter, according to Lipper. That's the worst quarter since the third quarter of 2008 when, you may recall, the U.S. financial system was tottering on the brink of collapse.
Funds that bet against the market, called shorting, jumped an average 29.8%. And specialty commodity funds eked out a 1.2% gain. Virtus Small-Cap Sustainable Growth was the top diversified fund, gaining 7.4% for the quarter.
But virtually all fund investors lost money in the third quarter. Funds that short the market have just $18 billion in assets, or 0.03%, of the $5.3 trillion in stock mutual funds.
One way you could have amplified your losses: sending your money abroad. International large-company core funds, one of the most popular types of foreign funds, dropped 20.4%. Funds that invest in China swooned 25.6%, falling even more than Europe funds, which posted a 23.1% loss.
Nice work if you can get it: You may be having a rotten year in mutual funds, but some fund executives are doing very well.
Abigail Johnson, who heads the Fidelity Personal, Workplace and Institutional Services unit, leads the list of the fund industry's wealthiest, according to Forbes. Estimated worth: $11.7 billion, thanks to her ownership stake in Fidelity. Her dad, Edward Johnson 3d, who is second in the ranks of wealthy fund execs, has a $6.5 billion fortune.
Other fund billionaires:
•Rupert Johnson (no relation to the Fidelity Johnsons), vice chairman of Franklin Resources, $4.5 billion. His brother, Charles Johnson, is Franklin's chairman, and he's worth $4.4 billion, Forbes says.
•Charles Schwab, chairman, Charles Schwab & Co., $3.5 billion.
•Bill Gross, chief investment officer, Pimco, $2.2 billion.
•Ron Baron, head of the Baron Funds, $1.5 billion.
•Michael Price, former manager of the Mutual Shares funds, $1.5 billion.
Some of these fund luminaries might see a slight diminution in wealth if current market trends continue.
Stock in T. Rowe Price, for example, has fallen 23% this year, vs. 9.3% for the Standard & Poor's 500-stock index. Federated Investments is down 30%, and stocks of asset management companies have fallen an average 27%, according to investment tracker Morningstar.
Fund news: Mairs and Power has a new fund, the Mairs and Power Small Cap fund (ticker: MSCFX). As David Snowball, editor of MutualFundObserver.com, notes, Mairs and Power rolls out a new fund every half-century or so. Their last launch was in 1961. Their flagship fund, Mairs and Power Growth, ranks in the top 3% of all large-company growth funds. … Vanguard Asset Allocation will be merged into Vanguard Balanced Index fund, the company says. … Cory Gilchrist has left the Marsico 21st Century and Marsico Global funds. Tom Marsico and James Gendelman will run the funds.
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