Nearly ev­ery type of fund rose last quar­ter, whether stocks or bonds, U.S. or for­eign.

The Denver Post - - BUSINESS - By Stan Choe

The good times keep rolling for fund in­vestors.

Nearly ev­ery type of fund rose last quar­ter, whether fo­cused on stocks or bonds, U.S. or for­eign. Gains were so wide­spread that more than 7,000 of the roughly 7,600 funds that Morn­ingstar tracks made money over the last three months. The nearly uni­ver­sal climb for funds means many re­tire­ment ac­counts and other port­fo­lios are the largest they’ve ever been. The av­er­age 401(k) bal­ance al­ready had come into the sec­ond quar­ter at a record level, ac­cord­ing to Fi­delity.

The good times, though, also co­in­cide with some in­creased risks. Stocks are near their most ex­pen­sive level in years com­pared to their earn­ings. And bonds, which are sup­posed to be the safe part of a port­fo­lio, are at risk for losses if in­ter­est rates rise, as many econ­o­mists ex­pect will hap­pen even­tu­ally.

For now, though, in­vestors have been bask­ing in the up­side. Cor­po­rate prof­its are back on the up­swing, which drove stock prices higher around the world, and con­tin­ued low in­ter­est rates helped push bond funds.

The largest mu­tual fund by as­sets, and one that’s the cen­ter­piece of many re­tire­ment port­fo­lios, closed out its sev­enth straight quar­ter of gains. Van­guard’s To­tal Stock Mar­ket In­dex fund re­turned 3.1 per­cent for the three months through Thurs­day.

Here’s a look at some of the trends that shaped the sec­ond quar­ter for fund in­vestors. All per­for­mance fig­ures are for the three months through Thurs­day:

• The econ­omy is still stuck in a lack­lus­ter pace, and its growth down­shifted to 1.4 per­cent in the first three months of the year from 2.1 per­cent in last year’s fi­nal quar­ter. With strong growth scarce, in­vestors bid up the stocks that are ca­pa­ble of pro­vid­ing it.

Tech­nol­ogy com­pa­nies are ex­pected to have some of the strong­est gains in earn­ings this year. Not only are busi­nesses look­ing to use tech­nol­ogy to im­prove their pro­duc­tiv­ity, con­sumers are mak­ing it an in­creas­ing part of their daily lives. That helped earn­ings for tech com­pa­nies in the S&P 500 soar more than 20 per­cent in the first quar­ter, and tech­nol­ogy stock funds re­turned an av­er­age of 6.4 per­cent over the last three months.

• A resur­gence for the euro and other cur­ren­cies against the dol­lar last quar­ter like­wise boosted for­eign stocks. It meant each euro rise in a French stock’s price was worth more in dol­lar terms than be­fore.

The most pop­u­lar type of for­eign stock fund, ones that hold a mix of large-cap stocks, re­turned an av­er­age of 5.9 per­cent. That’s more than dou­ble the 2.8 per­cent for their U.S. coun­ter­parts.

• In­ter­est rates have sunk this year. That helped drive the most pop­u­lar cat­e­gory of bond funds, ones that own in­ter­me­di­ate-term bonds, to an av­er­age re­turn of 1.6 per­cent over the last three months. They’ve done bet­ter than that just four times in the last 17 quar­ters.

• Crude dropped be­low $43 per bar­rel in late June, down from roughly $50 a year ago.

Funds that own en­ergy stocks lost an av­er­age of 12.1 per­cent, and ETFs that try to track the price of crude had sim­i­lar drops.

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