ROCKVILLE, Md. -- There have been even better years for mutual funds, but in 1999 the view from the top was amazing.
More than a few equity funds entered the stratosphere in 1999 as a record-breaking number of funds posted triple-digit returns.
In the 76-year history of mutual funds, only 21 funds have posted annual returns of 100% or more, and not one has returned 200% or more. But last year, according to a report from Weisenberger, a mutual fund tracking service based in Rockville, Md., no fewer than 168 funds generated triple-digit gains. In addition, 20 had gains of 200% or more; two exceeded 300%; and one, the Nicholas-Applegate Global Technology Fund, had an eye-popping annual return of 496%.
"We haven't seen anything like this since mutual funds were created in 1924," said Ramy Shaalan, mutual fund analyst at Weisenberger.
The big gainers in this top-heavy year brought the average return of U.S. equity funds in 1999 to 26%, the third best mark for the decade behind 1991 and 1995, which had average returns of 37% and 31%, respectively.
Unlike recent years, when large-cap growth funds dominated, the market broadened in 1999 as the Russell 2000 and the Standard & Poor's Midcap 400 index outperformed the S&P 500. As a result, many small-cap and midcap funds joined the triple-digit club.
Most of the gains had less to do with market cap and more to do with the segment of the market in which the funds invested. Most of the top funds were loaded up with technology stocks or stocks from Asia.
While the Nasdaq set a record with an 85% runup for the year, the even more technology-focused PSE Tech 100 index closed out 1999 with a gain of 117% for the same period. Japan-focused funds posted gains of 117% and Internet funds finished the year ahead 131%.
The year's best performing fund, the Nicholas-Applegate Global Technology Fund, had a 76% tech weighting. The second-place fund, the Warburg-Pincus Japan Small Company Fund -- which had an annual return of 330% in 1999 -- had 88% of its assets invested in Japan. Three of the top 10 funds were focused on Japan or Asia, while three focused on technology or the Internet. Overall, 47 non-U.S. equity funds had triple-digit gains for the year, while 44 technology sector funds made the list. The breakdown of domestic growth, small-cap and midcap funds with returns of 100% or more was 25, 23, and 16 respectively.
