Meanwhile, there is considerable doubt over whether the economy has bottomed and consumer sentiment, although improving, still isn't ecstatic. Moreover, a lot of Americans are still out of work.
Sit Developing Markets Growth Fund, which invests largely in growing foreign countries such as China, saw its shares rise by 31 percent in the first half of the year, rebounding from a 55 percent loss last year. Roger Sit, chief executive of Sit Investments, said most of the rebound resulted from investors returning with the confidence that the United States, China and other governments stand behind the slowly recovering global financial system.
"We're not out of the woods yet," Sit said. "I think we will be in a better place in six months. But we're not jumping back to 3 percent global economic growth. Maybe 1 to 2 percent. We're staying with quality companies focused on infrastructure and core industries."
Meanwhile, China's central government is moving toward cleaner technologies, energy conservation and alternatives that Sit believes also will lead to a more sustainable economy and U.S. investment opportunities in a country still reeling from the 2008 financial meltdown that cut U.S. demand for Chinese-made goods.
Not out of the woods
Beth Lilly, who manages the Gabelli Woodland Small Cap Fund from Minneapolis, has returned about 9 percent to shareholders this year. She's hopeful but not convinced we're out of the economic woods.
"Valuations were so compressed by March and April that I was buying companies for our portfolio that were selling at cash value, and some were only two or three times earnings," Lilly said. "We've seen a dramatic correction in the opposite direction since then."
Lilly said she's feeling better about the overall economy but "what I hear from companies is still a cause for concern. Not that things are going way down ... But that doesn't mean that the market won't continue to improve. I'm talking about industrial manufacturers, suppliers to Target, and they say demand is flat. We're not exactly snapping out of the recession. Some predict unemployment may yet exceed 10 or 11 percent."
Yet she still predicts that by winter the economy will start to grow.
The bond market was led during the first half of the year by rebounding junk-bond funds, basically making up losses of 20 to 25 percent that were incurred in 2008.
"We loved high-yield [funds] earlier, but some of the worst quality bonds have rallied so well that we're encouraging investors to focus more on investment-grade corporate bonds," Ameriprise's Joy said. "And the best, high-quality junk bonds."
Neal St. Anthony --612-673-7144 --nstanthony@startribune.com
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