As a new year begins, stock-fund managers are all smiles about 2009’s outsize gains, their best results in 50 years. But factor in the horrendous 2008 and some 97% of all stock funds still show a loss.
While the average 2009 stock-fund return of 34.9% was the best since 1958, average performance in 2008 was a loss of 40.5%, according to calculations from investment researcher Morningstar. So an investor with $1,000 invested on Jan. 1, 2008, would have only about $800 on Jan. 1, 2010.
The figures may explain why investors remain shy about heading into stock funds despite the rally since last March. “Maybe fund companies are excited about 2009’s returns, but investors are aware of how much money they’ve put into their accounts,” said Karen Dolan, Morningstar’s director of mutual-fund analysis.
Nicholas Thakore
Few stock funds have delivered positive returns over the past two years. Of the 2,301 stock funds with more than $100 million in assets that were around for all of 2008 and 2009 (meaning newly hatched ones are excluded), just 63, or under 3%, are in the black over the two years, Morningstar says.
Adjust the numbers for inflation, a low 2.5% for the two-year span, and that further whittles the in-the-black group to just 45 funds—less …
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