Stock Portfolios Soared, But Bears Took the Bonds;`Junk' Issues a Drag on Third Quarter Results
Funds that invest in a broad array of stocks gained a hefty 9.6 percent in the third quarter, thanks to a summer market rally that sent stock prices to record highs.</br></br>But bond and fixed-income funds barely broke even, hurt by a slide in the junk bond market and by rising interest rates, which depressed bond prices generally.</br></br>Among stock funds, the star performers were health and biotechnology funds, which rose 16.7 percent, chiefly on the popularity of medical service stocks. International funds, which got a boost from rising overseas stock markets, showed a 13.8 percent gain, according to the quarterly survey of mutual fund performance published by Lipper Analytical Securities Corp. Lipper monitors 1,013 stock funds in 14 different investment categories plus another 750 fixed-income and assorted funds.</br></br>The 9.6 percent gains by stock funds accelerated a movement toward higher fund prices that has been in progress since the market began its recovery from the October 1987 crash.</br></br>Mutual fund expert Michael Lipper, looking at the stock fund figures, acknowledged ruefully that the market had not paid attention to his warning last June that the strong gains of the first half of the year would not continue.