Word: p
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Dates: during 2000-2009
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...been a great year for many mutual fund investors. Standard & Poor's Equity Research reports that 165 equity mutual funds are up at least 47% through Oct. 31, or at least double the return of the S&P...
While investors in those funds should feel euphoric, S&P is quick to issue a warning to investors who might fall victim to those seductive returns. The S&P report, issued Friday, indicates that many of the best-performing funds relied on short-term strategies and paid little attention to the underlying fundamentals of the stocks in their portfolios, which could lead to a performance problem in 2010. "Using only a backward-looking approach to selecting funds [i.e., past performance] has significant flaws because it ignores the fundamentals of the stocks owned by the fund along with relevant risk...
...domestic equity funds that at least doubled the market's return, only 12% are ranked as S&P five-star funds. In fact, 19% are now ranked with a one- or two-star rating, effectively placing them in the bottom half of funds on overall attractiveness. "These funds have relatively weak fundamentals that contribute negatively to the ranking," S&P's analysts note in their report. The reasons cited for such low star rankings: many own overvalued or risky stocks, have managers with short tenures, have high costs or offer poor long-term performance...
...P research team cited Hotchkis & Wiley Mid-Cap Value Fund, Legg Mason Capital Management Opportunities Trust and Fidelity Select Automotive Portfolio as examples of funds that had eye-popping 2009 returns, but are currently ranked as two-star funds by the S&P...
...Erika P. Pierson is the incoming Columns Editor. She’s funnied...