MUTUAL FUND SCANDAL FAILS TO DERAIL GAINS BY STOCK
FUNDS
The US Stock market ended the year with an impressive gain of 25.3% surpassing
expectations of the investment community. The NASDAQ market netted a spectacular
gain of 50% in 2003, while the S&P 500 index advanced by 26.4%. Small
cap stocks, which generally rise during the early stages of a bull market,
gained 37.5% for the year.
Such gains come as a surprise to industry watchers, following the mutual
fund scandals and the resulting investigations announced by the New York
State Attorney General Elliot Spitzer. Three other companies Bank One,
Janus and Strong, were accused of allowing some hedge fund companies and
other large financial institutions to “time” their trades
so as to take undue advantage of market inefficiencies. Although timing
strategies are not necessarily illegal, but initiating such trades after
hours becomes problematic. Such mutual fund scandals were unable to derail
the gains in stock mutual funds however it shook the confidence of some
market participants.
Stock Fund performance for 2003
US stock funds did well during the 2003 session, according to data by
Lipper Inc., the average US stock fund was in the positive column with
a net gain of 33% for the year. US stock fund investors were happy to
see a renewed growth in their fund portfolios, following the melt down
of the past three years.
Commenting on the stock fund performance for 2003, James Oberweis Fund
manager for the Oberweis Micro-Cap Fund said, "2003 was a good year
because in 2002 people thought it would be a lousy year, now everybody
thinks 2004 will be a good year, will it be a great year? Who knows?"
The Oberweis Micro- Cap Fund was the best performing small cap fund for
the year, with an impressive gain of 112% through Dec 30, 2003. International
funds had a robust year as well with an average return of 38.9 for the
year.
Attention is now focused on 2004, while fund manager Oberweis did not
want to speculate on what kind of year 2004 would be for the markets,
he however disclosed that he is loading up his stock fund positions with
technology and health care stocks.
Source: Paul Oranika
Editor-in-chief
Hedgeco.net
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