Returns for many mutual funds were healthy during the first quarter of 2021. The winners won big. Outside of precious metal and bond funds, the losers’ losses were relatively small. Financial and energy equities provided catalysts to drive large sector fund returns for the quarter.

On a one-year basis, every equity-based fund included in the quarterly update universe realized positive returns. This held true even for the laggards. Many funds realized 12-month returns in excess of 100%. The timing of the calendar played a role, as the starting period was moved forward to April 1, 2020. This date followed the March 23, 2020, bear market bottom by a little more than a week and represented a time when stock prices were still low. Additionally, the rollout of coronavirus vaccines has allowed the stock market to continue setting new record highs.

Small Value Domestic Funds Excel

Bridgeway Small-Cap Value (BRSVX) was the top-performing fund overall in the first quarter of 2021, realizing a return of 41.0%. One-quarter of the fund’s portfolio is invested in financial services companies. Another 35% of the portfolio is split among consumer cyclical and industrial stocks.

The Bridgeway fund company was a strong performer, claiming four out of the five best-performing domestic fund spots for both the first quarter and one-year periods ending on March 31, 2021.

Small value did well overall. Every top domestic fund for the quarter and four out of the top five domestic funds for the year were in the small value category.

Growth Funds Stumble

All five of the quarter’s worst-performing domestic funds had a growth focus. The worst-performing domestic fund for the quarter was VALIC Company I Small Cap Aggressive Growth (VSAGX), dropping 2.6%. Almost 33% of the fund’s holdings are in health care sector.

Energy and Financials Lead the Sector Funds

Fidelity Select Energy (FSENX) took the first quarter’s sector crown by gaining 27.3%. As the name suggests, the fund invests in the energy sector, with a huge weighting in oil and gas companies. Ranking third was Cavanal Hill World Energy Investor (APWEX), with a gain of 21.4%.

Taking second and fourth places were Fidelity Select Banking (FSRBX) and T. Rowe Price Financial Services (PRISX), posting returns of 26.6% and 19.9%, respectively. Both hold banking stocks, which benefited from rising interest rates.

Gold and Health Funds Flop

Precious metal funds made up the three worst-performing sector funds, with Sprott Gold Equity Investor (SGDLX) declining by 14.5%, Fidelity Select Gold (FSAGX) down 12.3% and USAA Precious Metals and Minerals (USAGX) decreasing by 10.6%. All of Sprott Gold Equity Investor’s top 10 holdings, representing 48% of the fund, are in gold and mining companies. Gold had its worst quarter since 2016.

The fourth- and fifth-worst sector performers were in the health care sector. Invesco Health Care Investor (GTHIX) dipped 2.8% and Janus Henderson Global Life Sciences Class D (JNGLX) decreased by 2.7%. While these two funds didn’t perform as poorly as gold funds, it is worth noting that mutual funds in the health space had a poor quarter.

International Winners and Losers

Dodge & Cox Global Stock (DODWX), the best-performing international fund, shot up 11.6% during the quarter. The fund has a strong preference for financial equities, which make up 27% of its total asset allocation. Even though it has “global” in its name, 47% of the fund’s portfolio is invested in U.S. equities while an additional 20% is invested in European equities.

One-year returns for the best foreign funds, while impressive, were not as high as their domestic counterparts. American Century Global Small Cap Investor (AGCVX) was the only international fund to realize a triple-digit gain, rising 101.8%.

Fidelity Latin America (FLATX) was the worst-performing international fund for the quarter, falling 11.1%. The fund operates with 33 holdings; 64% of its portfolio is in Brazil, which has a high level of coronavirus cases. Fidelity Latin America also had the worst five-year return of the international stock funds, but still gained 4.8%. The second-worst performer for the quarter was T. Rowe Price Latin America (PRLAX), which declined by 6.7%.

Best- and Worst-Performing No-Load Mutual Funds