Checking Your Mutual Fund Returns? Better Sit First

The third quarter of the financial year just ended, and investors are starting to get their latest mutual fund statements. If you're about to check yours, you might want to sit down first.

What is not surprising is that the returns are going to be bad. What is unusual is how they're bad.

"I wouldn't say any of the stock categories came out unscathed, except for probably real estate," said John Coumarianos, a mutual fund analyst with Morningstar.

Here we are in the midst of a huge crisis that started with real estate, and domestic real estate funds are down only 4 percent this year. Given how this year's going, that's actually good. Coumarianos said real estate funds already took their beating last year. They also benefited from interest-rate cuts earlier this year — and they pay dividends, which makes them attractive investments.

You'd think, given the massive failures in banking, that the absolute worst performance would be in financials. But Coumarianos said technology and telecommunications funds fared worse.

"The other unusual thing about this year is that foreign stocks tended to do a bit worse than domestic markets, and that's a kind of reversal of a trend we've seen for most of this decade," he said.

Foreign stocks are closely tied to commodities, which have taken a beating since the summer, he said. The bottom line is, "There's been nowhere to hide, really."

Still, Coumarianos advises against running away from stocks. He has been buying stocks that he believes are near their bottom.

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