Nearly three-fourths of locally managed mutual funds, including all 20 bond funds, declined in value in the second quarter.
Of the 36 local equity and bond funds, 10 equity funds finished in positive territory for the quarter that ended June 28; 26 stock or bond funds lost ground.
The best performer for the three-month period was the Burnham Financial Industries Fund, managed by Mendon Capital Advisors Corp. in Brighton, with a return of 4.7 percent.
Next best were the Manning & Napier Small Cap Series with 4.3 percent and the Bullfinch Fund Unrestricted Series at 4.2 percent.
Standard & Poors' 500-stock index gained 2.9 percent, including dividends, for the quarter.
All funds in the bond portfolio managed by the Rochester division of OppenheimerFunds Inc. fell in the second quarter as Federal Reserve chairman Benjamin Bernanke indicated June 19 that the bond-buying program of "quantitative easing" to stimulate the economy is likely to be tapered by the end of the year.
The Oppenheimer Rochester National Municipals slipped 5.4 percent, with assets falling 13.8 percent. The standard-bearing Oppenheimer Rochester Fund Municipals declined 4.2 percent.
The first six months were the worst for bond performance since 1994.
"The closer we get to the end of the year, if we don't see quantitative easing, it's less likely we're going to see it until the first quarter of 2014," said Bullfinch Fund portfolio manager Christopher Carosa.
"We saw in June what happened. The market went down. It seems more and more likely that Bernanke wants to see the market up before he leaves, so he can maintain his legacy."
The Bullfinch Fund Greater Western New York Series was up 3.4 percent, in part because of Batavia-based Graham Corp., whose shares rose 22 percent to $30.03 at the quarter's end.
The Greater Western New York Series also benefited from strong performance by Astronics Corp. and Northrup Grumman Corp., Carosa said. Both have a strong presence in the Buffalo area.
"The economic fundamentals are still not in line with the rate of increases in the market," Carosa said. "However, I saw a report from economists who are predicting much bigger growth next year than what we're experiencing now. Again, it's hard for me to understand where they were getting those numbers from, but it's out there."
Carosa is bearish because he looks at the individual companies rather than the economy as a whole, he said.
"A lot of companies are being very circumspect," he said.
"The bellwether companies, mainly the technology companies, are the ones that best signal that we're leaving the recession."
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