Stock Funds Continue to Score
The 2.9% gain in August keeps the positive times rolling. Plus: A Financial Flashback to 95 years ago, the Wall Street bombing of 1920.
- U.S.-stock mutual funds/ETFs rose 2.9% in August, up 8.5% year-to-date. International stocks also performed well.
- Many analysts anticipate the Federal Reserve will cut interest rates, boosting investor confidence despite high valuations.
- Gold funds surged 20.7% in August, a 79.7% year-to-date increase, driven by geopolitical tension and rate-cut expectations.
No need to go to the replay: The stock market is grinding out wins like an NFL juggernaut.
In August, the average U.S.-stock mutual fund or exchange-traded fund posted a total return of 2.9%, according to LSEG data, to push the year-to-date advance to 8.5%. International-stock funds were also strong, up 3.5% in August and 21.2% for the year to date. (See funds-data tables including Mutual-Fund Yardsticks.)
The confidence of investors and many analysts stems from expectations that the Federal Reserve will cut interest rates at its policy meeting Sept. 16-17. In addition, tariff drama hasn’t sent investors into a panic.
While valuations are high, many analysts don’t see trouble ahead, short of the Fed surprising everyone by keeping rates as they are.
“Although September is typically the weakest month of the year on average, we don’t see anything on the horizon to knock this bull market off its path,” says Chris Zaccarelli, chief investment officer for Northlight Asset Management.
Some investors, wary of valuations of the growth stocks that have led the market, are adding to their positions in value stocks—shares that are thought to be trading below the companies’ worth. LSEG’s large-cap value category gained nearly 3% in August, to push the year-to-date gain to 10.8%, virtually even with large-cap growth’s year-to-date advance.
Gold-oriented funds have continued to rise along with record prices for the metal. Gold is being boosted by the perfect storm of geopolitical tension and the expectation of lower interest rates. Gold funds were up 20.7% in August, to push the year-to-date advance to 79.7%.
Bond funds rose in August. The total return for funds focused on investment-grade debt (the most common type of fixed-income fund) was 1.3% on average, to push the year-to-date gain to 5.1%.