Stock mutual funds kept chugging along in the final quarter of 2013, wrapping up a very profitable year for investors. The average diversified U.S.-stock fund returned 8.8% in the three months through December, bringing the return for the full year to a rich 32.3%, according to Thomson Reuters Corp.'s Lipper unit.
With much of the 2007-09 bear market having dropped out of five-year returns, the longer-term record is looking sweet as well. For the five years through year-end, the average diversified U.S.-stock fund returned an average of 17.7% a year.
Returns on foreign-stock funds were more restrained than those of their domestic counterparts in 2013. The average international-stock fund returned 5.8% in the fourth quarter, for a 19.6% average for all of 2013, according to Lipper.
Funds focused on emerging-markets stocks were laggards, returning an average of 2.5% for the quarter, to end with an average return of minus 0.1% for the year.
Meanwhile, many bond funds posted negative returns for 2013. The most widely held variety, funds that focus on intermediate-term investment-grade debt, returned an average of 0.2% in the fourth quarter, to end with a negative 1.9% return for all of last year.
Among the hardest-hit bond varieties were funds that focus on Treasury inflation-protected securities. Losses on many TIPS funds exceeded negative 6% for the year.
On the winning side, funds that buy below-investment-grade, or "junk," bonds returned an average of 6.8% in 2013.
Funds related to gold didn't glitter. Instead, they crashed. Those holding precious-metals stocks lost an average of 49.0% last year, while funds offering more direct exposure to precious-metals commodities prices lost 24.9%.
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The views expressed here are that of myself or the cited individual or firm and do not constitute a recommendation, solicitation, or offer by myself, D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.
The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville. The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.
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