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A Worse Bear Market Than 2001?

Sam Patel

03/04/08 - 03:42 PM EST
We are all aware that the economy has slowed -- but how bad is the situation, really?

Every month TheStreet.com Ratings analyzes and rates over 10,000 stock mutual funds. In order to better understand how far we have fallen and how bad things are, we looked at the level of returns being achieved now in 2008 as compared with the same time last year.

For simplicity's sake, we limited our comparison to all stock mutual funds that had a one-year return above 15% for both time periods.

As of January, 2007, there were nearly 1,400 stock mutual funds that earned a one-year return of 15% or higher; for this January, that number has plummeted to just 270 funds. That's an 80% decline.

Here are the best funds on that list as of Jan. 31:

Funds With Best One-Year Returns as of Jan. 2008
Fund Name Ticker 1 Year Return %
Direxion Latin America Bull 2X Inv DXZLX 59.17
CGM Focus Fund CGMFX 58.98
Profunds-Ultra Short Japan UKPSX 49.66
ProFunds-Precious Metals Ultra PMPSX 43.96
AIM China Fund C CACFX 42.92
US Global Inv Gold Shares USERX 42.86
Guinness Atkinson China & HK Fund ICHKX 40.35
Profunds-Ultra Emerging Mkt UUPSX 40.03
T. Rowe Price New Asia Fd PRASX 38.66
Goldman Sachs BRIC A GBRAX 38.59
Waddell & Reed Adv Asset Strat A UNASX 38.58
Source: TSC Ratings

In terms of categories, there's a mix of precious-metal funds, emerging-market funds, energy, small-cap, growth and foreign funds in the 2008 list -- whereas, in 2007, the list was dominated by foreign and real estate funds.

Already in this correction, which is only about two months old, there has been an 80% decline in the number of funds able to achieve a 15% return -- and we could see further falls in the level of profitability not only in the stock mutual fund space but in the economy in general.

From December 2000 to December 2001 -- the bursting of the tech bubble -- the drop over 12 months was only 57%.

The stock mutual-fund data indicate that this correction has the potential to be of far greater magnitude and breadth than anything experienced in 2001.