First, it is important to dissect the performance of the manager from the performance of the market. In 2008, even the best managed equity funds performed poorly. Of course, the bear market dragged everything down on an absolute basis. So we must consider a manager's performance relative to the market, recognizing that even a well-managed fund will go through difficult periods of relative performance. Even if a fund has underperformed for a year, or perhaps two, it might not be appropriate to jettison that fund. There are some things to look for, though. Is the fund high cost? This is the handicap that causes most active funds to underperform, so it is one of the most important considerations across both stocks and bonds and segments of those markets. Take a look at this chart, produced by Vanguard using Morningstar data, which shows the relative performance figures of high-cost funds versus low-cost funds.