Time to Say Goodbye to That Struggling Fund?
And you thought last year was bad.
Jim Cramer noted Monday morning, many obscure, and some well-known, stock funds are already down more than 40% -- an even 20 by my count -- through Friday's close. He advises dumping these reeling funds and other tech-heavy growth funds like those from Janus before each dollar you gave them last year turns into even less pocket change. For many investors, I agree that it might make sense to dump or ratchet down your exposure to these sagging funds and their fellow sufferers. But let's take a look at what funds we're talking about and then move a bit beyond the buy-sell-or-hold conversation, focusing on the question you have to answer once you dump a loser: Now what? It's no secret what spelled doom for the funds that are down more than 40%. No matter whether they're classified as big-cap, mid-cap or small-cap growth funds, they landed in this sinking boat because of big bets on tech stocks. Since the Nasdaq peaked, however, these funds have typically lost between half and three-quarters of their value. Consider that the average big-cap growth fund in this dubious club has a 90% stake in tech stocks, more than double its average peer, according to Morningstar. These funds' steep losses are tough to digest. The only saving grace might be that aside from the broker-sold (MAFOX Quote)Merrill Lynch Focus Twenty fund, which has $1.2 billion in assets thanks to portfolio manager Jim McCall's past success at PBHG Funds, these are fairly small, fringe funds. The next largest fund on the list is the no-load (BFOCX Quote)Berkshire Focus fund, which has Malcolm Fobes at the helm and $279 million in its coffers, a fifth the size of its average peer, according to Morningstar. But there are some large funds in the big-cap growth pack with sizable losses that haven't cracked the 40% barrier yet, but are still down steeply for the year -- like the no-load (FLRFX Quote)Invesco Blue Chip Growth fund and the no-load (WOGSX Quote)White Oak Growth Stock funds. The funds, already down 28% and 24.5%, respectively, this year, have almost $8 billion in their combined coffers.| Big-Cap Funds With Big-League Losses These five funds' fat tech bets have poisoned them lately. | ||
| Fund | YTD Return | 3-Year Annualized Return |
| (BFOCX Quote)Berkshire Focus | -50.8% | 23.5% |
| (VOPIX Quote)ProFunds Ultra OTC | -46.8 | N/A |
| (RYVYX Quote)Rydex Dynamic Velocity 100 | -46.7 | N/A |
| (MAFOX Quote)Merrill Lynch Focus Twenty | -43.3 | N/A |
| (AIVTX Quote)Ameritor Investment | -40.7 | -4.4 |
| Avg. Peer | -13.0 | 7.9 |
| Source: Morningstar. Returns through March 9. | ||
| Smaller Fry Funds with Big Dips These mid- and small- cap funds have taken big-time tumbles so far this year. | ||
| Mid-Cap Growth Funds | ||
| Fund | YTD Return | 3-Year Annualized Return |
| (VWPVX Quote)Van Wagoner Post- Venture | -50.3% | 15.0% |
| (VWEGX Quote)Van Wagoner Emerging Growth | -50.2 | 18.8 |
| (VWMDX Quote)Van Wagoner Mid-Cap Growth | -50.1 | 0.7 |
| Avg. Peer | -14.4 | 11.4 |
| Small-Cap Growth Fund | ||
| (ROEGX Quote)Roulston Emerging Growth | -41.9% | N/A |
| Avg. Peer | -11.3 | 7 |
| Source: Morningstar. Returns through March 9. | ||
| Tech Funds at Ground Zero You expect tech funds to buckle when the sector tumbles, but these 10 have been hit the hardest | ||
| Fund | YTD Return | 3-Year Annualized Return |
| (VWTKX Quote)Van Wagoner Technology | -50.7% | 19.6% |
| (BTECX Quote)Berkshire Technology | -50.6 | N/A |
| (TEFQX Quote)Firsthand e- Commerce | -50.1 | N/A |
| (BTBAX Quote)Amerindo Internet B2B | -47.5 | N/A |
| (DTYAX Quote)Delaware Technology & Innovation | -47.3 | N/A |
| (VWTKX Quote)Van Kampen Technology | -45.2 | N/A |
| (GTTCX Quote)AIM Global Telecom & Technology | -42.0 | -8.3 |
| (ATCHX Quote)Amerindo Technology | -41.6 | 8.0 |
| (VTCHX Quote)Vintage Technology | -40.9 | N/A |
| (ANTAX Quote)AIM New Technology | -40.0 | N/A |
| Avg. Peer | -13.0 | 7.9 |
| Source: Morningstar. Returns through March 9. | ||
| What Have You Done for Me Lately? Janus' ten biggest funds still have solid records over the last three years, but only two have kept up with their peers over the last year. | ||||
| Janus Fund | 1-Year Return | Rank vs. Peers (1=best, 100=worst) | 3-Year Annualized Return | Rank vs. Peers (1=best, 100=worst) |
| (JANSX Quote)Janus* | -29.1% | 45 | 11.9% | 21 |
| (JAWWX Quote)Worldwide* | -36.3 | 80 | 11.6 | 16 |
| (JAVLX Quote)Twenty* | -48.1 | 92 | 11.9 | 21 |
| (JAMRX Quote)Mercury | -45.4 | 88 | 21.2 | 4 |
| (JAGIX Quote)Growth & Income | -23.7 | 28 | 15.6 | 11 |
| (JAOSX Quote)Overseas* | -41.6 | 90 | 13.4 | 9 |
| (JAENX Quote)Enterprise | -59.1 | 89 | 15.5 | 30 |
| (JAOLX Quote)Olympus* | -50.3 | 94 | 22.1 | 2 |
| (JABAX Quote)Balanced | -7.8 | 81 | 13.3 | 3 |
| (JAGTX Quote)Global Technology* | -62.9 | 54 | N/A | N/A |
| S&P 500 | -11.0 | N/A | 6.8 | N/A |
| Source: Morningstar. Returns through March 9. *Closed to new investors. | ||||
The Junk Pile
You probably noticed that many of the funds on the dubious lists above are less than 3 years old. It's often said that younger, smaller funds tend to outperform older funds that are larger and less nimble. Well, that hasn't necessarily panned out in the tech sector. The 52 tech funds launched before 1999 lost an average of 30.8% last year, compared to a 36% average loss for the 71 tech funds launched after 1999, according to Morningstar. That said, much of the difference might be attributable to the crop of Net funds that launched after 1999, just in time for the Net bubble to burst.- Loading Comments...
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