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Mutual Fund Black List: Sell These Duds Now

April 14, 2008 – by Richard Band

You don’t need me to tell you it has been a tough year for many mutual fund managers. Even some of the greats, with the finest long-term track records, stumbled.

But some funds just aren’t worth keeping. It’s not simply a matter of poor performance or high expenses. You should also sell a fund if the manager is taking reckless risks: concentrating a huge percentage of the fund in one industry, or "doubling down" on stocks that have collapsed in price since the fund first bought
them.

I’m wary, too, of managers who refuse to acknowledge their mistakes. If a fund manager insists that his or her analysis of a company that hurtled into bankruptcy was "fundamentally on target," I have to question whether that person is capable of basic critical thinking. Self-delusion can be fatal in this business.

I recommend selling the following poorly managed funds. Performance is a problem for all of them.

Cut these
clunkers loose now:

  1. AIM Constellation
  2. Fidelity Aggressive Growth
  3. Hotchkis & Wiley Core Value
  4. Janus Worldwide
  5. John Hancock Classic Value
  6. Legg Mason Value Trust
  7. Pioneer Value
  8. Putnam Voyager
  9. RiverSource Large Cap Equity