2007 - The Year In Funds (The Short Version)
Lots o' ups, lots o' downs, but in the end, 2007 was a good year for the vast majority of mutual funds.
To sum up 2007, growth beat value, large cap beat small cap, foreign beat domestic, safe bonds beat risky bonds, and emerging markets and natural resources topped the charts. If you avoided financials and real estate, you probably did fine in 2007.
The typical diversified U.S. stock fund was up around 6% in 2007 - not bad, but underwhelming for their risk. Lets not forget for most of the year you could get over 5% in Vanguard money market funds, good CDs, and FDIC insured online savings accounts.
As Investor's Business Daily notes in their 2007 fund review, just about everything was up except funds tied to the deflating real estate bubble:
Stock mutual funds made 2007 the fifth year in a row of gains. But it often didn't feel like the market was advancing.
The year was marked by volatility. U.S. diversified stock funds lost ground in four months -- February, June, July and November.
The main culprits were the subprime lending crisis and ensuing credit crunch. Investors also worried about inflation, soaring key commodity prices, slowing U.S. economic growth and a falling dollar. And don't even ask about geopolitical tensions.
Still, the market grew. U.S. diversified stock funds racked up a total return of 6.85% for the year through Dec. 27, according to Lipper Inc. That lagged their five-year average annual return of 13.95% and 15-year average annual gain of 9.98%. Growth walloped value in all size groups. Mid-cap growth beat all other categories, averaging 17.04%.
The leading sector was natural resources, which skyrocketed 40.01%."
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