The US has, as with most other developed markets, seen a resurgence in fund performances in the last...
The US has, as with most other developed markets, seen a resurgence in fund performances in the last year, with the average fund in the S&P Equity US sector gaining approximately 18%. Funds investing in US small-caps have returned around 33%. The leading fund in the sector returned 120% during the last year, albeit at a level of volatility over three times that of its sector average - the fund has seen fourth quartile performances the two discrete years prior to this. This region is often looked to for an indication of which direction other markets may take, and it may be a relief to note that all but one fund in the sector have seen positive performances in the last year.
The S&P America sector update commented that "while the spring rally captured everyone's attention, it is important to maintain a broader perspective of market performance over the past year. Like the previous year, it was a volatile market with several distinct phases. The bear market reached its low in early October 2002 and there was then a brief rally led by the technology sector. Reminiscent of the year before, this fourth quarter rally was short lived and most of these gains were given back in December and January as market leadership rotated rapidly. Following the March to June cyclical rally, the large-cap market entered into a trading range and once again saw short bursts of leadership from different sectors." The report further noted that though small caps were in similar lines to their large-cap counterparts, the rally in smaller companies continued for longer.
The report also discussed trends among rated managers: "The extreme shifts in market performance once again proved challenging to the average fund manager over the past year. Most fund managers reacted cautiously to the market rally, reflecting a blend of scepticism after several bear market rallies and the belief that market performance would be choppy in 2003."
The Janus World US Venture, which is situated in the S&P US Smaller Companies sector, has gained 50% during the year, beating its sector average by a healthy margin. Though in 2002 the fund was beating the sector mean, S&P analysts commented that the fund had suffered from its growth orientation at that time.
In recent market conditions which have favoured small-cap funds, JPMF's America Micro Cap, has also performed well over the period, gaining 42%. This is the fourth year in a row of first quartile performances from the fund, and the S&P ratings report commented that microcaps are "a segment of the market that is not broadly followed, creating opportunities for the JP Morgan Fleming specialist team to identify undervalued growth opportunities."
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