Many stock funds still showing losses, but they aren't superbad

NEW YORK -- It might be safe now for investors to open both eyes when they look at their quarterly mutual fund statements.

The news won't be good, as it was two years ago when the stock market was still churning higher. But it won't be nearly as gruesome as it was a few months ago.

Many fund categories are showing single-digit percentage slides for the January-March quarter, according to Lipper, which tracks fund performance. That's a huge victory compared with negative returns of more than 20% in the final three months of 2008.

Lipper's latest figures don't include the final three trading days of the first quarter, but the improvement from the dark months of the fall and late 2008 is clear.

Take large-capitalization growth funds: They are showing a negative average return of 0.1% for the quarter. That compares with the 23.3% negative average return for the fourth quarter.

Ted Aronson, a partner at Aronson-Johnson-Ortiz in Philadelphia, said a stock market rally now in its third week is making returns far more palatable.

"It's not a bull market but certainly just a boring, blah market and boy does that feel good," he said, in contrast to a punishing slide in stocks in 2008 that left the Standard & Poor's 500 index down 38.5%.

Investors in some specialty funds, which track individual industries or groups of industries, might be surprised to find there isn't a minus sign before their fund's return. In the fourth quarter, nearly everything lost ground except funds that placed bets stocks would fall.

But in the first quarter, which ends Tuesday, there were pockets of strength. Science and technology funds posted a 7.8% average return, while telecommunications funds saw a 3.1% average return, according to the preliminary figures.

The strong performance of technology-focused stocks has helped the Nasdaq composite index. It's down only 2% for the quarter. The Dow is now down 11.4% after an 18.8% rally in only 14 trading days. The Standard & Poor's index is off 9.7%.