The third quarter of what has been an ultra-volatile year for stocks is now in the books, and that means it’s time to take a look back at some of the quarter’s best funds. Now to be certain, Q3 was a bonanza for many fund categories, and for quite a few individual funds. In fact, the overall market managed to perform very well, with the S&P 500 Index logging a third-quarter return of 10.72%. Yet when compared to the best-performing mutual funds and mutual fund categories, the S&P 500’s gains are peanuts.
So, which individual, non-leveraged mutual funds performed best during the third quarter? Here’s a list of the top 10 performers ranked by total third-quarter return. The list was compiled via a Bloomberg screen of mutual funds with over $1 billion in assets.
| Ticker | Name | Bloomberg Objective | Q3 Total Return |
| FLATX | Fidelity Latin America Fund | Region Fund-Latin American | 23.25% |
| VGPMX | Vanguard Precious Metals & Mining | Sector Fund-Precious Metals | 23.25% |
| PRLAX | T. Rowe Price Latin America | Region Fund-Latin American | 22.90% |
| BIEMX | William Blair Emerging Mkts Growth | Emerging Market-Equity | 21.76% |
| JPASX | JPMorgan Asia Equity Fund | Region Fund-Asian Pac Ex Japan | 21.61% |
| FIEUX | Fidelity Europe Fund | Region Fund-European | 21.16% |
| FKRCX | Franklin Gold and Precious Metals-A | Sector Fund-Precious Metals | 21.06% |
| GMEFX | GMO Emerging Markets Fund | Emerging Market-Equity | 20.83% |
| ODVYX | Oppenheimer Developing Mkts-Y | Emerging Market-Equity | 20.83% |
| GEMMX | GMO Emerging Markets Fund-VI | Emerging Market-Equity | 20.81% |
As you can see by the above table, regional funds pegged to Latin America, precious metals, emerging markets and even Europe were among the top performers.
Winning the Q3 mutual fund performance roundup with a stellar 23.25% total return was the Fidelity Latin America Fund (FLATX), a fund that holds stocks such as regional wireless giant América Móvil, S.A.B. (AMX), Brazilian energy firm Petróleo Brasileiro S.A. (PBR) and Brazilian mining behemoth Vale S.A. (VALE).
The Vanguard Precious Metals & Mining fund (VGPMX) was tied for first, and with the huge spike in the price of gold and other precious metals, it’s no surprise that this extremely well-managed fund outperformed.
Now, if we take a look at smaller mutual funds we find that many of the quarter’s best performers employ leverage to enhance their returns. The following table shows the top performing mutual funds for Q3 that have over $25 million in total assets. As you can see, atop the list are funds designed to deliver more than just the normal performance of their underlying index.
| Ticker | Name | Q3 Total Return |
| INPIX | ProFunds Internet Ultra Inv | 39.46% |
| DXELX | Direxion Monthly Emerging Mkts Bull 2X | 39.12% |
| BMPIX | ProFunds Basic Materials Ultra Sect | 31.86% |
| RYVYX | Rydex NASDAQ 100 2X | 30.76% |
| UOPIX | ProFunds Ultra NASDAQ 100 | 30.47% |
| DFRSX | DFA Asia Pacific Small Co | 27.74% |
| UMPIX | ProFunds Ultra MicCap Inv | 25.99% |
| DPCRX | Dreyfus Greater China Fund 1 | 25.17% |
| ICHKX | Guinness ATK China & Hong Kong Fund | 25.09% |
| DPCAX | Dreyfus Greater China Fund -A | 25.05% |
Coming in at No. 1 is the ProFunds Internet Ultra Sector Inv (INPIX). This fund is designed to deliver performance equal to 150% of the Dow Jones Internet Composite Index, an index whose top holdings are Google (NASDAQ: GOOG), Amazon.com (NASDAQ: AMZN) eBay (NASDAQ: EBAY), Yahoo! (NASDAQ: YHOO) and Priceline.com (NASDAQ: PCLN). These stocks all have performed exceedingly well in Q3, and that’s why this leveraged fund pegged to the sector did so well.
In second place was the Direxion Monthly Emerging Markets Bull 2X (DXELX), a fund designed to deliver 200% of the price performance of the MSCI Emerging Markets index. With emerging markets so hot in Q3, it stands to reason that a leveraged emerging market mutual fund would do very well, and this Direxion fund certainly proved that thesis correct.
Now, in terms of mutual fund categories, you might assume that emerging markets, precious metals and Internet funds all would have done well. You’d be correct in that assumption; however, there were a few surprises. The following table shows the top 15 Bloomberg fund categories ranked by third-quarter return.
| Category | Q3 Return % |
| Region Fund-Nordic Average | 23.73 % |
| Country Fund-United Kingdom Average | 20.87 % |
| Region Fund-Asian Pac Ex Japan Average | 19.52 % |
| Region Fund-Eastern European Average | 19.46 % |
| Country Fund-China Average | 19.32 % |
| Emerging Market-Equity Average | 18.54 % |
| Region Fund-Indian Subcont Average | 17.71 % |
| Region Fund-European Average | 17.16 % |
| International Equity Average | 16.74 % |
| Sector Fund-Internet & Telecom Average | 16.56 % |
| Region Fund-Asian Pacific Average | 16.13 % |
| Region Fund-Latin American Average | 15.87 % |
| Sector Fund-Technology Average | 15.70 % |
| Sector Fund-Precious Metals Average | 15.44 % |
| Country Fund-South Korea Average | 15.25 % |
Perhaps the biggest surprise here is the performance of the Regional Fund Nordic Average. I don’t think too many investors were aware that Nordic funds were so red hot, but as you can see here, they top the list with an average return of 23.73% for the category in the third quarter.
Second on the list also may come as a surprise to some, with mutual funds pegged to the United Kingdom coming in with an average performance of 20.87% for the quarter. Asia Pacific funds Ex-Japan (19.52%), Eastern Europe funds (19.46%) and China funds (19.32%) round out the top five Bloomberg mutual fund categories.
All in all, Q3 was a terrific quarter for stocks. The bullish sentiment wafting in the air gave the top mutual funds above and mutual fund categories some very solid performance. Now we’ll have to see if stocks can continue their stellar run in the fourth quarter.
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