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December 28, 2012

Preliminary 2012 Fund Performance: Global Economic Uncertainty Left Most Fund Investors Unscathed

by Lipper Alpha Insight.

Preliminary 2012 Perf
Well, the end of 2012 is upon us, and if you were asked to guess annual fund performance based solely on the events of the past year, you would most likely guess wrong. The past year has been defined by slow U.S. economic growth, an unresolved European debt crisis, natural disasters, declining corporate earnings, a slowdown in China, the presidential election, and the “fiscal cliff.” With the news-driven volatility we have seen in the markets since 2008, you would think that just one of these events—let alone all of them—would be an ingredient for a less-than-stellar year in the equity and bond markets. Guess again.

Overall, fund investors have done spectacularly well for the year, with the average equity fund returning 13.75% through December 27. Long-term fixed income funds did not disappoint either, registering on average a total return of 7.42% over the same period. In the chart above we show the preliminary 2012 returns for Lipper’s major macro-groups as well as the ten top and bottom performers by Lipper classification. Interestingly, only eight classifications registered negative annual returns, with most of them being commodity or commodity-based groups. So, although one may assume the strong equity and bond fund performance we have seen would translate into a better economic picture, this does not seem to be the case. If that were true, we may have also expected that prices of input-based goods would have followed suit. Maybe that is something we will see in 2013…

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