With the second quarter now one trading day old, The Wall Street Journal has put together a preliminary scorecard on how funds did during the first quarter. The results are not necessarily good. The average fund gained 0.96% in the first quarter. The average index fund gained 4.8%. The big losers, though, were small cap funds. They dropped an average of 5.9%.

The numbers become more worrisome when looked at in light of an article appearing in The Boston Globe. The Syre & Stein article uses two long stretches of underperformance at Vanguard Windsor and investors differing reactions in the cases. When John Neff underperformed in 1989-1990, investors stayed the course. Yet when Charles Freeman lagged in 1997-1998 they fled in drove. The paper points a finger at fee-based financial advisors who have to justify their role. Other contributing factors, say Syre & Stein, are the media reporting dy by day results, and fund supermarkets which make it easier to trade.

Fund directors amy sleep a little easier. The WSJ reports that the ICI has increased the protection it offers fund directors byder its liability policies. The increased protection includes coverage for some defense costs, settlements and judgements in cases brought by investment advisors against directors.

The Fidelity Select Home Finance Portfolio has a new portfolio manager. The Boston Behemoth named Victor Y. Thay as manager of the fund, according to the Boston Globe. He takes the reigns from William Rubin, he is leaving Fidelity. 

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