Many top US funds still making up lost ground

By Ross Kerber

NEW YORK (Reuters) - At the midyear mark, even some of the best-performing mutual funds of 2009 are still working on comebacks from dismal losses last year, underscoring lingering uncertainty in markets and in the funds industry.

Equity funds that invest in China and Latin America boast some of the biggest gains this year, according to fund-tracker Lipper Inc, a Thomson Reuters company, as well as some high-yield bond funds. Big losers include financial services sector funds and bond funds that invest in U.S. treasuries.

Yet many of top funds are only making up for losses suffered in the brutal bear market of 2008.

A top equity performer, Dreyfus Emerging Asia Fund DEACX.O, was up 84.3 percent through the end of June, swinging from a decline of 61.4 percent in 2008.

Also, the best mid-cap growth fund for the first half of 2009 was one from the RiverSource unit of Ameriprise Financial Inc (AMP.N), RiverSource Mid Cap Growth Fund INVPX.O, up 31.4 percent for the first half of the year -- compared with a decline of 44.7 percent last year.

Among large-cap growth funds, the best was Van Kampen's Equity Growth fund VEGAX.O, up 34.4 percent through midyear -- after a decline of 50.7 percent last year.

"What we have here was a reaction like the pendulum swinging the other way," said Lipper research manager Jeff Tjornehoj. That doesn't mean that the gains will continue, he cautioned.

"The market built a little momentum and wham bam, you had a terrific year to date in 2009," he said. But he added, "it's not like this is how the rest of the year will go." A positive scenario would be for the market to hold on to its gains and not repeat last year's volatility.