Sunday, March 18, 2001

Some sectors rise against the tide

Gold, small-cap and Latin funds gain

By Alan Clendenning
The Associated Press

        NEW YORK — While Wall Street shuddered this week at steep losses that have sent the Dow Jones Industrial Average down 9 percent this year, some market players have won gains from investments in sectors that were out of favor mere months ago.

        The Dow had its biggest weekly point drop ever this week, closing at 9,823.41, off 821.21 for the week. That eclipsed the 805.71 the blue chips lost during the week ended April 14, 2000. The Nasdaq Composite Index finished at 1890.91, down 7.9 percent for the week.

        But despite those losses, there are winners this year. Among them: mutual funds specializing in gold, Latin American stocks and small capitalization value stocks, according to figures from fund-tracker Lipper Inc.

        Gold funds, which have performed horribly over the long term, are up 7 percent on average this year because of uncertainty over the direction of the global economy, said Don Cassidy, a senior research analyst with Lipper.

        “Gold traditionally in times of economic or market or international political upheaval is a safe haven,” Mr. Cassidy said.

        Small-cap value funds that invest in companies with market capitalizations of under $200 million are up 5.8 percent for the year. The funds benefited as investors abandoned large-capitalization stock funds which performed well in the past but had technology holdings that were decimated.

        While international funds based in Europe and Asia posted steep losses, their counterparts focusing on Latin America have registered a 6.7 percent gain this year, according to Lipper.

        Latin American stocks were laggards last year, but heightened investor confidence over political stability in Chile, Argentina and Mexico helped turn the situation around, Mr. Cassidy said.

        Some U.S. consumer electronics companies have also fared well, said Peter Benedict, an analyst at CIBC World Markets Corp.

        He pointed to Best Buy Co. Inc., a nationwide chain of huge stores selling such products as computers, DVD players, stereos and video games. The company's stock is up 39 percent for the year, closing at $40.97 Friday on the New York Stock Exchange.

        “Demand for digital products has held up very well in this slowdown,” Mr. Benedict said. “They're still buying digital TVs, digital camcorders and digital cameras.”

        Shares of Philip Morris Cos. Inc. are up 9 percent for the year, closing at $48.15 Friday, also on the NYSE. The food and tobacco company's gains come despite a 7.5 percent drop for the week.

        The company's shares “are attractively valued, and (top managers) have been active in returning cash back to shareholders through share repurchases and dividends,” said Tim Swanson, a beverage and tobacco analyst at A.G. Edwards & Sons Inc.


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