Mutual Fund 'Mutts' Pounded in '08

Regardless of the sad "tail" of the 2008 mutts, with one positive result and one market-equivalent, negative result, the analysis of this bounce-back strategy continues.

In 2009, with the Federal Reserve now finished lowering interest rates, the incoming Obama administration is already on the ground in Washington, stumping Capitol Hill for a massive stimulus package of tax cuts and spending the likes of which have not been seen since the time of the Great Depression. The targets for "shovel ready" spending include long-live assets like bridges, roads and water systems. Hopefully this will be more effective than the temporary, economic blip from the stimulus checks.

The 23 mutts from 2008 were selected for having lost more than 12% in 2007 after having gained more than 12% in 2006. The same list for 2009 would be 364 funds long, so the members have been restricted to 2007 winners rising 12% or more that also lost 50% or more in 2008. Of these 18 new mutts, 16 of the funds target segments of the growth category and two focus on the technology sector.

The two funds falling the furthest are the Alger MidCap Growth Fund (AMCGX Quote) and the Alger American MidCap Growth Portfolio (AMGOX Quote). Both funds have similar portfolios of stocks primarily selected from the Russell Midcap Growth Index. The Alger MidCap Growth Fund has a 5% back load, 2% early withdrawal penalty, 2.04% expense ratio, 1% 12b1 fee and 0.76% management fee.

All but the 0.76% management fee and a 0.91% expense ratio can be sidestepped with the Alger American MidCap Growth Portfolio. Notable combined holdings include Research In Motion (RIMM Quote), National-Oilwell Varco (NOV Quote), Fluor (FLR Quote) and Apple (AAPL Quote).

2009 Mutts: Stock Mutual Funds Down 50% or More in 2008 After 12%+ Gains in 2007 Fund (Ticker) Rating Objective Total Return 2008 Total Return 2007 Alger MidCap Growth Fund (AMCGX US) E Growth-Mid Cap -58.83% 30.68% Alger American MidCap Growth Portfolio (AMGOX US) U Growth-Mid Cap -58.36% 31.56% Bridgeway Aggressive Investors 1 Fund (BRAGX US) E Growth -56.16% 25.80% Wasatch Ultra Growth Fund (WAMCX US) E Growth -55.40% 15.11% Bridgeway Aggressive Investors 2 Fund (BRAIX US) E+ Growth -55.07% 32.19% Old Mutual Select Growth Fund (OAHEX US) D- Growth -54.49% 26.24% RS MidCap Opportunities Fund (RSMOX US) E+ Growth-Mid Cap -52.50% 17.53% BB&T Mid Cap Growth Fund (OVCBX US) D- Growth-Mid Cap -51.54% 33.70% Janus Venture Fund (JAVTX US) E Growth-Small Cap -51.43% 16.36% Allianz OCC Target Fund (PTAAX US) E+ Growth -51.29% 19.12% Keeley Mid Cap Value Fund (KMCVX US) E Growth-Mid Cap -51.27% 21.68% Columbia Technology Fund (CMTFX US) D- Sector Fund-Technology -51.00% 23.54% RS Technology Fund (RSIFX US) E Sector Fund-Technology -50.90% 22.25% Calamos Growth Fund (CVGCX US) E+ Growth -50.65% 22.32% Chesapeake Core Growth Fund/The (CHCGX US) D- Growth-Large Cap -50.57% 15.86% Morgan Stanley Inst - Capital Growth Portfolio (MSEQX US) D- Growth-Large Cap -50.47% 22.29% DWS Small Cap Growth Fund (SSDAX US) E+ Growth-Small Cap -50.39% 14.76% AIM Global Small & Mid Cap Growth Fund (AGAAX US) D+ Aggressive Growth -50.05% 18.61% Source: Bloomberg

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