Energy stock funds were the standout performers in the third quarter, rising 11.6 percent on average, while tech stock funds tracked by Morningstar dropped 1.4 percent. The gains were driven largely by the war with Iran, which pushed up oil, gas and refined fuel prices and contributed to a broader interest-rate surge. Domestic stock funds fell 1.8 percent on average, taxable bond funds lost 2.2 percent, international stock funds declined 0.6 percent, and municipal bond funds dropped 5.6 percent.
The weak stretch highlights how difficult it is to forecast sector or asset-class performance over short periods. Most investors hold stocks and bonds through mutual funds and exchange-traded funds, and third-quarter results reflect the poor to mediocre market environment.
Still, over the past year and five years the stock market has been strong enough that many portfolios have likely grown despite recent bond-fund losses. The energy rally argues for broad diversification using index funds that track global markets as core holdings.
Retirement savers saw modest declines across target-date and income funds, though their diversified designs kept losses mild. Funds with a target date of 2060 or later fell 0.4 percent in the quarter but gained 14.2 percent over 12 months and 9.6 percent annualized over five years, according to Morningstar.
Source: New York Times Business · Summarized by HeadlinesBriefing