So far, 2005 has produced a bull market–in oil prices. From around $43 per barrel in early January, prices have risen to over $60, an increase of around over 40 percent. Natural resources mutual funds (which tend to invest heavily in energy stocks) gained 24 percent, through July, following returns of 33 percent and 27 percent, respectively, in 2003 and 2004, according to Morningstar, a mutual fund research company.
For the broad market, though, stock funds and bond funds generally have not done nearly as well this year, with a few specialized exceptions. Key trends:
Domestic stock funds have gained 4 percent. No category of diversified stock funds have returned as much as 7 percent.
After natural resources, stock funds have been led by two other niche categories: Latin American funds (up 19 percent) and utilities funds (13 percent).
This may indicate that it’s time to take some profits in specialty funds, especially natural resources funds, and maintain periodic investments in diversified stock funds, which have yet to shoot up this year.
