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Funds that rode the market’s rally to generate the highest second-quarter returns included those invested in assets such as mining stocks, energy and technology.

Global financial markets staged an impressive rebound in the second quarter despite deepening economic pain from the coronavirus pandemic, with the U.S. equity benchmark S&P 500 index clocking its strongest performance since the fourth quarter of 1998.

That helped an overwhelming number of funds generate a positive return over the last three months, even as they remained down in the year to date.

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Many sectors that suffered the steepest losses as broad parts of the global economy went under lockdown during the first three months posted the largest comebacks.

U.S. energy funds, as well as those domiciled in Europe, Asia and Africa, jumped around 30% during the quarter, alongside a 24% surge in industrial commodities and a 27.7% gain in U.S.-based small-cap funds, according to Morningstar data.

Despite those gains, each sector remains down 3% or more for the year to date.

While equity markets rebounded, investors remained cautious that unprecedented economic stimulus measures by global central banks would spark inflation.

U.S-based precious metal funds soared nearly 54% during the quarter, the most of any asset class, and are up nearly 13% for the year through June 28, according to Morningstar.

Overall, 282 out of 293 non-U.S.-domiciled global fund categories tracked by Morningstar posted gains in the second quarter, with agriculture funds suffering the worst loss with a 4.4% decline.

For the year to date, only 86 fund categories have a positive return, led by a 15.8% gain in precious metals funds and a 15.7% gain in biotechnology funds.

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In the U.S., only 2 out of 107 fund categories - bear market funds, and managed futures - posted negative returns during the quarter. For the year to date, 71 fund categories are in the red, led by the 40% decline in energy equity funds.

“The market very quickly embraced that there was going to be a deep recession and investors are now looking forward to what that healing process will look like,” said Brian Jacobsen, senior investment strategist for the Wells Fargo Asset Management Multi-Asset Solutions team.

A recent surge in U.S. coronavirus cases will likely not push financial markets into another panic because of gains in controlling the spread of the virus in Asia and Europe, Jacobsen said. The U.S. now accounts for a quarter of all coronavirus infections.

In the U.S., the S&P 500 was up as much as 25% at one point in the second quarter before pulling back to post a 16% gain, mirroring its 20% decline in the first three months.

Those gains helped bolster funds such as the GMO Special Opportunities fund, which led all actively managed equity funds with a 151% advance in the second quarter.

The managers of the fund, which has its largest positions in consumer companies such as Carvana Co and communications firm Cardlytics Inc, declined comment.

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The top-performing fixed-income fund, meanwhile, was the Braddock Multi-Strategy Income fund, which invests mainly in mortgaged and other securitised debt, with a 32.6% gain. The fund remains down 34.4% for the year to date.

Among fixed-income funds in general, U.S.-based emerging market debt funds returned 12.7% while high-yield bonds gained nearly 9%. U.S.-based government bond funds, meanwhile, gained 0.6% or less as Treasuries edged off of historic low yields.

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