Fidelity Auto Fund Almost Doubles in Quarter

Who would have thought that a mutual fund focusing on the car industry, littered with bankrupt companies, would be the top performer in the second quarter?

Investors threw in enough cash for clunker stocks to drive the Fidelity Select Automotive Portfolio(FSAVX Quote) 81% higher in the three months ending June 30. Tenneco(TEN Quote) rocketed 550%, ArvinMeritor(ARM Quote) surged 456% and Ford(F Quote) rose 131%. As the weaker players get shaken out of the industry, the survivors are positioned for a return to growth in the fourth quarter and next year.

The U.S. economy isn't out of the woods yet. An unemployment rate of 9.5%, the highest in 26 years, shows just how far off the beaten path we have wandered. With June's average hourly earnings flat from May and up just 2.7% in a year, the smallest annual rise since September 2005, the buying power of Americans remains constrained.

It's no wonder that eight of the 10 best-performing stock mutual funds look for investment opportunities outside the U.S.

The second-best performing open-end stock mutual fund in the second quarter was the ProFunds UltraLatin America(UBPUX Quote). The fund, which tracks the Latin America 35 ADR Index, jumped 77%. Key holdings include steel producer Gerdau(GGB Quote), up 91%; commercial bank BanColombia(CIB Quote), up 58%; and cement maker Cemex SAB de CV(CX Quote), up 55%.

The Rydex S&P Smallcap 600 Pure Value ETF(RZV Quote) is ranked as one of 10 best-performing exchange traded funds. Rydex Small Cap Value Fund(RYAZX Quote), its similarly indexed open-end fund from the same fund family, also scored a top-10 finish, returning 69%.

Best-Performing Open-End Stock Mutual Funds in the Second Quarter Fund (Ticker) Rating Total Return 1 Month Total Return 2nd Qtr Fidelity Select Automotive Portfolio (FSAVX) C- 10.2% 81.4% ProFunds UltraLatin America (UBPIX) U -7.7% 77.4% Direxion China Bull 2X Fund (DXHLX) U 6.1% 74.6% EM Capital India Gateway Fund (EMINX) U -2.6% 73.0% ProFunds Ultra China ProFund (UGPIX) U 2.0% 73.0% Rydex Small Cap Value Fund (RYAZX) E+ 8.6% 69.0% Dreyfus Emerging Asia Fund (DEAAX) U 0.4% 68.2% Matthews India Fund (MINDX) B- -2.3% 66.0% Alpine International Real Estate Equity Fund (EGLRX) E 1.4% 63.8% Direxion Emerging Markets Bull 2X Fund (DXELX) E -5.9% 62.9% Source: TheStreet.com Ratings & Bloomberg