Mutual Fund 'Mutts'

Just as the Dow has its dogs, mutual funds have their mutts. The concept is pretty simple: What gets overly beaten down this year has more upside potential next year.

This strategy is used to identify good companies whose bad year caused them to be overlooked or undervalued.

If the theory holds, then mutual funds that did OK last year (2005) but have taken it on the chin so far this year (2006) have a better chance of making a comeback and be winners next year (2007). ...