NEW YORK (AP) – Break out the Spice Girls CDs. That was one of the best years in decades for funds.
Funds of all types made money through 2019, from risky ones full of stocks from developing economies to stodgy funds holding only super-safe Treasury bonds. Someone who came into 2019 with their money split between the largest U.S. stock and U.S. bond funds made 19.6% last year. That’s the most since the Spice Girls and Notorious B.I.G. were topping the charts in 1997 and Vanguard’s Total Stock Market Index and Total Bond Market Index funds returned a composite 20.2%.
Give credit to central banks around the world, which cut interest rates and unleashed stimulus in hopes of goosing the global economy amid low inflation. The moves helped silence a warning bell of recession that sounded in the U.S. bond market during the summer, the first time that had happened since the run-up to the Great Recession. A truce in the trade war between the U.S. and China also gave the markets a lift toward year’s end.
Yet, even though markets steadily rose to one of their best years since the days of Fruitopia, many investors simply couldn’t stomach joining the ride – or even staying on it.
“Investors generally are nervous,” said Greg Davis, chief investment officer at Vanguard. “There’s uncertainty given all the trade concerns, uncertainty around fiscal policy, and it’s been a reluctant rally.”