lemon list
Written by David, July 21st, 2010
It’s summer, and the weather is heating up all across America. To cool off, many people will pour themselves a tall glass of ice-cold lemonade. Hey, I think it’s fine if your lemons get squeezed into lemonade, but what isn’t fine is if you have lemons in your investment portfolio.
The lemons I’m talking about here are underperforming mutual funds, funds that have earned a spot on the infamous Mutual Fund Lemon List, the list of the worst-performing mutual funds. To be classified as a lemon, the fund must pass strict screening criteria: it must underperform its peer group average for the last 12 months, as well as for the last three and five year periods.
This quarter’s Lemon List includes 1,584 mutual funds totaling $715 billion in assets, and if one of the funds you own is on the list, you need to squeeze that lemon from your holdings.
To see the latest edition of the Lemon List, and to get your FREE update each quarter, just go to the Mutual Fund Lemon List website today.
Hey, all you have to lose is that sour taste in your portfolio.
Written by David, January 20th, 2010
It’s time again for our quarterly lemon-squeezing ritual. That’s right, it’s time for us to expose the worst-performing mutual funds for what they really are — sour investment vehicles that will make your portfolio pucker.
For Q4, 2009, the Mutual Fund Lemon List contains 1,566 mutual funds totaling $651 billion in assets! Now to be classified as a lemon, the fund must pass strict screening criteria: it must underperform its peer group average for the last 12 months, as well as for the last three and five year periods.
Incredibly, out of this quarter’s universe of 1,566 lemon funds, over 38% (a total of 605) actually had negative annualized returns over the past five years.
It’s becoming increasingly clear to me that investors need to wake up to the reality that many mutual funds just can’t perform as well as those exchange-traded funds (ETFs) with the same investment objective. Sadly, the result is that many investors are losing money that they really cannot afford to lose.
There really is no reason to continue investing in under-performing mutual funds. To find out if you own a lemon fund, simply click here.
Written by David, May 01st, 2009
It’s time again for our quarterly lemon-squeezing ritual. That’s right, it’s time for us to expose the worst-performing mutual funds for what they really are — sour investment vehicles that will make your portfolio pucker.
For Q1 2009, the Mutual Fund Lemon List contains 2,335 mutual funds totaling $718 billion in assets! Now to be classified as a lemon, the fund must pass strict screening criteria: it must underperform its peer group average for the last 12 months, as well as for the last three and five year periods.
Incredibly, out of this quarter’s universe of 2,335 lemon funds, over 30% (a total of 730) actually had negative annualized returns over the past 10 years. Even historical stalwarts like Fidelity Magellan (FMAGX) and Fidelity Growth & Income (FGRIX) failed to outperform the S&P 500 (SPY) over the past 10 years.
It’s becoming increasingly clear to me that investors need to wake up to the reality that many mutual funds just can’t perform as well as those exchange-traded funds (ETFs) with the same investment objective. Sadly, the result is that many investors are losing money that they really cannot afford to lose.
The following table shows examples of how much you could have saved if you invested $100,000 over the past five years in ETF equivalents instead of these 10 Lemon List laggards. (click table to view larger)
As you can see, there really is no reason to continue investing in under-performing mutual funds. To find out if you own a lemon fund, simply go to www.MutualFundLemonList.com for my complete Q1 Lemon List.
Written by David, August 20th, 2008
The greenback is back!
That’s right, the value of the U.S. dollar versus rival foreign currencies has surged over the past several weeks, and that surge has caused quite the dust up in the international equity markets.
Just five weeks ago the dollar had been languishing at record lows against the euro. But last week the dollar hit a six-month high against the euro and a two-year peak against the U.K. pound sterling.
The chart here of the U.S. Dollar Index tells a revealing story.
So, why the quick turnaround in the greenback’s fortunes?
I think the basic reason is that the economies of Europe are slowing way down. In fact, the eurozone economy is now flirting with recession. To see the evidence of this we need simply examine the numbers. The 13-nation eurozone economy contracted 0.2% in the second quarter. That was the first decline since before the euro’s introduction in 1999, with the economies of Germany, France, and Italy all contracting.
Furthermore, inflation in the eurozone is running at almost double the European Central Bank’s (ECB) target rate, which makes it unlikely that the ECB will cut interest rates anytime soon. The result is that both European economies and the euro are likely to fall on hard times for a while.
Of course, the other result of the dollar’s surge has been a sharp sell off in international equities. Just look at the recent plunge in one of the biggest international exchange-traded funds (ETFs), the iShares EAFE Index (EFA). Year-to-date EFA is down 20.9%! Now that’s what I call an international bear.
Surprisingly, EFA is actually one of the best-performing international funds so far in 2008. The iShares MSCI Emerging Markets (EEM) has plunged 21.6% this year, and big international markets like China, as measured by the iShares FTSE/Xinhua China 25 Index (FXI), have collapsed 30.6%.
But it’s not just international ETFs that have been hit so hard this year. International equity mutual funds have also languished. Three of the biggest international mutual funds are the Oakmark International fund (OAKIX), down 19% for the year; Fidelity Advisor Diversified International (FDVAX), down 20.3%, and the Bernstein International Portfolio (SIMTX), which has fallen 23.1% year-to-date.
Not surprisingly, all three of these funds are on my Lemon List, the list of America’s worst performing mutual funds.
The bottom line here is that when the dollar is in a bullish mood, international equities tend to turn bearish.
Written by David, August 06th, 2008
Want to here the latest update on my Lemon List, the list of America’s worst-performing mutual funds?
Well, now you can take a listen to my chat with Fabian Wealth Strategies vice president David Fabian, who presented me with the highlights (or should I say low lights) of some of the most egregious mutual fund offenders in what was a very tough second-quarter.
To listen in on my chat with David, click here.
Listen to the Windows Media File
Download the MP3
If you own a mutual fund, or if you were planning on buying a mutual fund anytime soon, I urge you to listen to this segment today. A little chat under the lemon tree could save you from a very sour-tasting portfolio down the road.
