Analysis: Growth funds among third quarter winners for U.S. investors as COVID concerns grow

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A man famous outside the Bombay Stock Exchange (BSE), after Sensex first crossed the 60,000 level, in Mumbai, India on September 24, 2021. REUTERS / Francis Mascarenhas

NEW YORK, Sept. 30 (Reuters) – U.S. mid-cap growth funds, emerging market equities and inflation-protected bonds were among the winners for U.S. investors in a turbulent third quarter that saw saw the benchmark S&P 500 hit a record high before falling in late September as rising Treasury yields and debt negotiations in Washington weighed on investor morale.

Growth funds investing in US stocks beat their value-oriented peers in the quarter as a resurgence of COVID-19 over the summer strengthened the case for investors to look to some of the big names technology that dominated markets during last year’s coronavirus lockdowns, reigniting the so-called door-to-door commerce. This movement has reversed in recent weeks as Treasury yields have skyrocketed. Read more

The mid-size US large-cap growth fund gained 4.6%, while the mid-size large-cap value fund gained 0.9%, according to Morningstar. The S&P 500 is on track for a gain of 1.4%, after rising nearly 8.2% in the second quarter.

“The general meltdown of risky assets has continued and we believe this is largely due to accommodative monetary policy,” said Marc Zabicki, research director for LPL Financial.

Investors are now assessing to what extent the concerns that have erupted in recent weeks will impact the performance of US stocks for the remainder of the year. These include a hawkish Federal Reserve tilt that boosted Treasury yields, the collapse of heavily indebted Chinese real estate developer China Evergrande Group (3333.HK), and a potentially gruesome debt ceiling battle among lawmakers. Americans. The S&P 500 is on track for a loss of 3.6% for the month of September. Read more

“The global economy is suffering from a series of significant economic shocks at a time when certain market segments are quite expensive based on high expectations of long-term growth,” wrote Sébastien Galy, senior market strategist at Nordea Asset Management.

The $ 37 million Alger Mid-Cap 40 ETF was the top performer among funds investing in U.S. equities, gaining 17.4%, according to Morningstar. The fund’s main holdings include cloud-based company HubSpot Inc (HUBS.N), which rose 16.9% for the quarter, and biotech firm Repligen Corp (RGEN.O), whose shares climbed by nearly 44% for the quarter.

Among the top performers for the quarter were several funds that invest in Indian stocks, reflecting the rise in the Sensex stock index (.BSESN), which is up 24.4% this year on a wave of liquidity fueled by the central bank and a wave of technology. targeted public offers. Food delivery company Zomato Ltd (ZOMT.NS) jumped nearly 66% on its market debut after its Indian IPO on July 23, while shares of state-owned Life Insurance Corp are set to debut later this year in what is expected to be India’s biggest. initial public offering registered.

Gains in the boiling Indian market propelled Wasatch Emerging India fund by $ 617 million ahead of all other actively managed US funds, with a return of 21.9% for the quarter through September 24, according to data. latest available from Morningstar. . The fund’s largest position, accounting for almost 10% of its assets, is in financial services firm Bajaj Finance Ltd (BJFN.NS), whose shares have risen nearly 130% in the past 12 months. .

Among bond funds, six of the 25 best-performing funds invested primarily in inflation-protected bonds, nearly double any other category, Morningstar said, fearing the current surge in consumer prices might last longer. provided that.

The $ 4.2 billion AlphaCentric Income Opportunities Fund, a multi-sector fund with roughly half of its portfolio in lower-grade bonds, had the best performance among bond funds in general, with a return of 4% for the quarter.

A key factor that will likely boost stock and bond performance for the remainder of the year will be the outcome of debt ceiling negotiations in Washington over the next several weeks, said Randy Frederick, chief trading and trading officer. products derived from the Schwab Center. for Financial Research.

Congress has yet to pass a funding bill to keep government open. Treasury Secretary Janet Yellen has warned that the U.S. government will hit its debt limit on October 18, opening up the possibility of a default.

Frederick expects the stock market to recover until the end of the year if these issues are resolved before the deadline.

Reporting by David Randall; Editing by Ira Iosebashvili and Leslie Adler

Our Standards: Thomson Reuters Trust Principles.


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