Sometimes, pain hits nearly everywhere. The vast majority of mutual funds skidded to losses last quarter as worries worsened about global economic growth.
Uncertainty about interest rates made markets even shakier.
Only 17 percent of the mutual funds tracked by Morningstar were able to scrounge out positive returns in the three months through last month.
That is down from 41 percent in the second quarter, and it is the reverse of the first quarter, when 87 percent of funds made money.
The biggest losses last quarter came from funds that invest in stocks, which is typical when fear is high.
Bond funds offered some protection, fulfilling their traditional role of stabilizers for a portfolio, but not as much as they have in prior downturns.
All but three of the 2,255 mutual funds that focus on US stocks had losses.
They could not overcome worries that a slowing global economy could hurt profits for US companies, which are increasingly reliant on customers abroad.
The US Federal Reserve’s decision to hold off on raising rates at its last meeting also shook markets.
LOSSES
Consider the largest mutual fund by assets, Vanguard’s Total Stock Market Index fund, which helps make up the core of many 401(k) accounts and IRAs.
It lost 7.3 percent over the three months. That is its biggest quarterly loss in four years. If it does not rebound in the next three months, the fund could have its first down year since the financial crisis in 2008.
The best-performing US stock fund last quarter was the Polen Growth fund. It returned less than 1 percent.
One of the hottest areas for US investors has been foreign stock markets.
Europe and Japan are earlier in their economic recoveries than the US, which means their central banks are pushing stimulus while the Fed moves in the opposite direction.
FOREIGN MARKETS
That, plus cheaper valuations abroad, led US investors to pour nearly US$210 billion into foreign stock mutual funds and exchange-traded funds in the 12 months through August.
They pulled more than US$7 billion out of US stock funds over the same time.
After plowing that much in, investors were rewarded with losses from nearly all foreign stock funds last quarter.
All but four of the 1,154 dropped last quarter.
The sharpest losses came from funds that focus on stocks from emerging markets, which have a long history of big swings.
Latin American stock funds tumbled an average of 21.4 percent, while Chinese stock funds lost 20.1 percent.
China’s economic growth is in the midst of a sharp slowdown, which is pulling down prices for the commodities that Latin American companies produce.
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