Preliminary estimates by Lipper Analytical Services Inc. of equity mutual fund performance in the third quarter put virtually all domestic equity funds in negative territory.
All 36 of New York-based Lipper's equity and mixed equity investment objectives were down in the quarter.
Equity funds overall fell an estimated 14.79% in the third quarter 1998, their very worst performance since third quarter 1990. In the general and sector equity categories, 13 of 16 investment objectives posted double-digit losses. Mixed equity funds lost the least, down only 7.33% for the quarter. Fixed-income holdings in this objective helped staunch the wounds caused by the equity market in third quarter.
When dissected by sector, Lipper found utility funds hemorrhaged the least, returning 4.48%. The gold fund investment category, for the first time in a long time, did relatively well compared to stock funds, only losing 6.25% in the quarter. On an individual fund level, the five best performing stock funds were all bear market funds.
Lipper analysts were correct when they cautioned investors their equity allocations might be too high in the analysis at the end of the second quarter.
Their end-of-the-third-quarter warnings should perhaps be heeded: "The bright side of this bear run is that we survived without seeing a redemption run. Also, the decline so far has been fairly concentrated and relatively small in historic terms. The relatively mild size of the correction leaves the possibility of further decline."