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Rating:Jaffe Warns Investors About Bad Mutual Fund Relationships Not Rated 0.0 Email Routing List Email & Route  Print Print
Tuesday, September 10, 2013

Jaffe Warns Investors About Bad Mutual Fund Relationships

News summary by MFWire's editors

If you're in a bad relationship, MarketWatch's Chuck Jaffe wants to help.

Jaffe says investors' allegiance to bad mutual funds runs deep, The funds lose money and perform badly, but they still stick with them anyway. The Steadman Funds were a good example because they earned the nickname the "Deadman Funds" as the fund was thought to be so bad that only a dead investor would stick with them as their issues shrank to zero, Jaffe writes.

Investors staying with a bad fund isn't such an anomaly, however, Jaffe writes. Morningstar numbers show that there are funds with 20-year track records that fall in the bottom 25 percent but they still manage to survive, Jaffe writes. Big name funds that fit the bill are Fidelity Emerging Markets or Invesco Technology, in the dead last percentile for their peer group over the past 20 years, and big name funds that survive without thriving such as T. Rowe Price International Stock, Fidelity Magellan, or Fidelity Growth and Income.

Just because a fund is performing badly in its peer group, however, doesn't mean that it's not fairly staid and safe, Jaffe writes. Investors shouldn't be satisfied with long-term mediocrity, because the effects can still be devastating, Jaffe writes. Investors shouldn't be concerned with finding a fund that necessarily makes it to the very top of the pile every year, but they should at least aim for a fund that stays above the category average.

To read more, click here

Edited by: Casey Quinlan

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