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Morningstar Market Commentary: First Quarter 2006

Stocks pick up where they left off in 2005, make good gains.

Sanjay Arya, 04/13/2006

In the first quarter of 2006, the U.S. stock market picked up where it left off in the fourth quarter of 2005. In an all too familiar pattern, small stocks continued to lead the way as all nine Morningstar style indexes ended the quarter on a positive note. The Morningstar US Market Index--which tracks performance of the broad U.S. equity market--gained 5.2% for the first quarter.

In our quarterly review, Morningstar fund analyst John Courmarianos provides insights into the market's performance:

To recap some of the key trends:

  • Small caps are hard to beat. Small-cap stocks outperformed their mid- and large-cap peers by a wide margin.
  • Value stocks maintained their edge. Although core and growth stocks posted respectable gains, value stocks continue to lead the pack.
  • Passive benchmarks proved a tough bogy to beat. As a group, actively managed funds were able to beat their respective style index in only three of the nine style boxes. 

Sanjay Arya is director of Morningstar Indexes.

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