The official returns are now in. As Fedsmith.com readers know, we projected a November rate of return for the C fund at 5.7%. Fortunately (for our reputation anyway), the actual number came in at 5.7%.
That is certainly good news for investors in the common stock fund as it is the second month in a row of positive returns after a string of disappointing months. The C fund is still down 16.48% for the past twelve months and the first couple of trading days in December have not been encouraging. But, as all investors know, the market doesn’t move in a straight line so long-term investors can take heart that there appears to be a strengthening economy which should help returns over the next year. The big unknown that will continue to impact stocks for the near future is the possibility of a war with Iraq. Investors don’t like instability and uncertainty and a war has plenty of both. Once this situation is resolved, there is likely to be a big upward impetus for stocks.
The F fund disappointed investors this month with a negative return of 0.1% for the month. It is still up 7.36% for the past twelve months. The negative return is due to the low interest rates on bonds and, at least indirectly, to the move into stocks again as investors try to capture a potential upward move in the stock market.
The G fund continued its fairly predictable return but it too is down slightly from returns the past few months. Again, the lower interest rates for bonds created a slightly lower rate of return. The G fund is up 5.04% for the past twelve months.
And, if readers need any reminder that a diversified portfolio is a good idea, the best performer for the month was the small company index fund (the S fund). It came in at 6.76% for the month although it is down 9.90% for the past twelve months. Small company stocks tend to be more volatile and can move up fast in a positive economic environment since they usually have more room to grow than larger, more established companies.
The international stock fund (the I fund) also had a positive return providing investors with a 4.49% positive performance for November. It is down 12.68% for the past twelve months.