Small-cap and midcap growth stocks were the stars of the great equity market revival of 2003, according to the latest quarterly Pensions & Investments survey of mutual funds most used in defined contribution plans.
In a sign of just how strongly the sector performed, Vanguard's Extended Market Index Fund — benchmarked to the Wilshire 4,500 index of all listed U.S. companies apart from the Standard & Poor's 500 heavyweights — claimed sixth place in the survey, with a 12-month return of 43.43% through Dec. 31.
The 44% gain enjoyed by that small-cap to midcap sector last year made it the best equity pond to be fishing in, said John H. Laporte, a portfolio manager at T. Rowe Price Associates Inc., Baltimore, whose T. Rowe Price New Horizons Fund posted the survey's second strongest equity return of 49.31%.
But after three miserable years, every pond seemed to be well stocked in 2003. Managers of value equity and technology funds also delivered gains of 40% or more, while managers of high-yield fixed income and overseas bond funds posted returns in excess of 25%.
For the year, the S&P 500 index rose 28.68%; the Morgan Stanley Capital International Europe Australasia Far East index soared 39.17%, and the Russell 2000 index jumped 47.25%.