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Byline: PAUL KATZEFF
Small-cap growth funds led U.S. diversified fund categories in July, climbing 5.72% in the month. They paced U.S. diversified funds' 2.52% gain, according to Lipper Inc.
The performance reflected a solid month for the market. The Nasdaq composite jumped 6.05% through July 30. The Dow Jones industrials gained 2.52%.
Bond funds fell as interest rates backed up and fiscal issues hit municipal debt.
"Stocks avoided a collapse because the economy is starting to come on like gangbusters," said Philip Orlando, lead manager of $275 million Federated Large Cap Growth Fund. "And we're seeing increased earnings estimates for the third and fourth quarters."
Small-cap growth funds shined. "They were better (than other categories) in terms of beating expectations and year-over-year growth," said Paul Wojcik, lead manager of $65 million T. Rowe Price Diversified Small-Cap Growth Fund.
Frontier Airlines, one of his top performers, gained 29% for the month through July 30.