Time to Sell Strong Funds?

So while there's little reason to hold onto funds operated by firms you no longer have faith in, don't sell simply to "send a message." Rather, carefully consider where you want to deploy your money, given your risk tolerance and asset-allocation plan.

In addition to choosing the type of investment you're replacing your Strong and Putnam investments with, evaluate the type of firm that manages the funds you're considering. Putnam has long had a history of erratic and abrupt manager changes, while Strong has had numerous run-ins with federal regulators over the years.

Also, before you sell, keep your own tax strategy in mind. Selling this close to the end of the year means you'll receive an almost immediate tax impact. That can be a big wallop if you're selling a fund that has (perhaps for the first time in several years) turned a profit.

If you're sitting on big gains, consider selling some now, and some in the new year. If you're selling a fund at a loss, remember that you can only offset $3,000 of ordinary income with any losses that exceed the amount of gains you reap in that year.

While we're still months away from knowing just how systemic these improper trading practices are in the fund industry, a little due diligence now will ease the potential pain of selling and hopefully minimize the chance you'll have to go through this again.

Have a question for Bev on personal finance, tax or mutual fund matters? Write to her at [e-mail].

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