Mutual Fund 'Mutts' Pounded in '08

The second set of results from the experimental "mutts of the funds" strategy are in. Unlike the 2007 mutts, which modestly outperformed the market, the 2008 mutts were pounded in line with the overall market.

This contrarian theory, extrapolated from the Dogs of the Dow investment strategy, argues that, on a macro level, funds that had previously performed well but posted a bad year are likely to bounce back the following year.

In 2008 -- the worst year for stocks since the Great Depression as the S&P 500 sank 37% and the Nasdaq Composite dove nearly 40% -- the 2008 mutts averaged a comparable loss of 37.95%. While 11 of the 23 funds performed better than the S&P 500; 12 did worse than the benchmark. ...