After a disastrous 2008, 2009 and 2010 turned out to be good years for investors. The average stock fund gained over 30 percent in 2009, according to Morningstar, followed by gains of nearly 20 percent in 2010. Among last year’s leaders:
* Precious metals mutual funds, up 42 percent in 2010.
* Real estate funds, up 27 percent.
* Small-company mutual funds, up 25 percent.
* Foreign small-and midcap funds, up 23 percent.
* Technology funds, up 20 percent.
Will those trends continue? That’s hard to know. Precious metals funds (which mainly hold gold mining stocks) have returned an extraordinary 25 percent per year for the past 10 years, so they may be ready for a correction. On the other hand, financial woes in countries such as Portugal could continue throughout 2011, which might create more demand for gold, sending the per-ounce price even higher.
In any case, the above results show the importance of holding a diversified portfolio. Predicting winners is difficult but if you spread your money among many types of stocks you’ll increase your chances of participating in this year’s trend.
