Stock Funds Felt the Tech Pain in April

Plugged in.

Technology stocks absorbed their long-awaited drop in April, to the detriment of mutual funds and exchange-traded funds that had gained momentum. Some investors hoped it was just a needed pause after shares of software, social media and other tech companies soared. As April ended, the tech-focused Nasdaq Composite Index recorded its weakest month since 2008: down 13%.

Damage isn’t just limited to engineering. According to Refinitiv Lipper data, the average US fund is down 8.6% for the month. As of 2022 so far, through April, funds are down 14.1%. Meanwhile, the mid-cap large-cap growth fund, backed by corporate earnings potential, is down 12.4% for the month and 22.1% so far this year, according to Lipper.

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Fund performance April 2022, total return by fund type.

Katie Nixon, chief investment officer at Northern Trust Wealth Management, wrote in an April market commentary: “Selling has been particularly intense in sectors that have captured hearts, minds and wallets. of many retail investors: the high-tech sector. On a more positive note, she added, “When we look back at history, it’s remarkable that retail investors don’t have a particularly good track record of timing the market and its drivers. Behavioral opinions tend to lead to ‘selling low and buying high.’ While we agree with the premise that conditions are uncertain, we remain constructive on global equity markets.”

International equity funds are down 6.6% in April and down 14.3% so far in 2022.

Meanwhile, investors are not getting any comfort in their bond funds. Expectations of higher interest rates have sent bond yields skyrocketing – pushing bond prices down, in a seedy relationship between bonds and yields. With inflation in mind, analysts have raised their forecasts for how much the Fed will raise rates in response to it — ahead of last week’s Fed meeting when a half-percent increase is announced. (That, in turn, punished the stock, as higher ratios hurt the company’s bottom line.)

Bond funds fell in April. Funds tied to medium-term, investment-grade debt (the most common type of fixed-income fund) are down 3.7% and down 9.4% this year.

Mr. Power is an editor for the Wall Street Journal in South Brunswick, NJ Email him at william.power@wsj.com.

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Appears in print May 9, 2022.

https://www.wsj.com/articles/stock-funds-felt-tech-pain-april-11651859816?mod=rss_markets_main Stock Funds Felt the Tech Pain in April

Edmund DeMarche

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