There are a lot of mutual funds out there that are not worth investing a single dollar into. High expense ratios, poor investments, and bad management are some of the things you have to look out for when you’re putting your own hard-earned money into a brokerage account.
Be careful when you invest and make sure to stay away from these stinkers:
Fidelity Growth Strategies (FDEGX) – Despite it’s reasonable ratios and investments, this fund fell catastrophically from its high in 2000 in the 70’s and his traded mainly in the teens for the last 9 years!
Legg Mason Capital Management (LMNOX) – A popular choice absolutely tanked in 2008 tossing 65% of its value away. It has been rebounding since last year, but still remains a cloudy choice.
Frontier Micro Cap (FEFPX) – With an expense ratio of 18.4% this fund easily slips into the Hall of Shame as funds this expensive can almost never be justified. On top of its poor performance, this fund gets a black star for the most embarrassing fund in existence.
CGM Focus Fund (CGMFX) – Fund manager Kenneth Hebbner made an appalling mistake by overweighting his fund’s portfolio with oil stocks which caused a short-term gain in 2007 but ultimately devastated the value of this fund. Management like this makes you question the future.
Putnam New Opportunities (PNOPX) – Rebounding recently, this fund had abysmal returns from poorly selected large-cap companies. Their Morningstar rating remains poor.
The Congressional Effect Fund (CEFFX) – A poorly conceived fund attempts to determine how much value Congress destroys through legislation. Don’t even look at the performance of a fund like this – listen to the fundamentals this fund is based on.
Herzfeld Caribbean Basin Fund (CUBA) – This fund is comprised of a variety of assets that will likely appreciate if the Cuban embargo ends. If it does, this stock will soar, but I wouldn’t bet on this happening any time soon.
If you are investing, it’s pretty easy to see why you should avoid most of these mutual funds. Avoiding market fundamentals, charging too much to operate a fund, and questionable management decisions have all forced these mutual funds into the Hall of Shame.
There are many other funds that should be avoided at all costs, but this list includes funds that all have a variety of flaws and they should stay out of your portfolio at all costs… those costs may be your portfolio!