M*: Funds That Went From Worst To First

Ted

FYI: As investors review their results for the year and plot a course for the future, some will no doubt be tempted to dump the holding that did worst and reallocate that money to the managers who did best. Yet a review of the greatest turnarounds this year suggests that your biggest winner in 2020 might be one of your biggest disappointments from 2019. At a minimum, be sure you aren't selling simply because the fund's style is lagging.

Here's a look at six prominent funds that have gone from worst to first. One thing that links all of them is that they persevered with their strategy rather than pivoting to something else. As Vanguard founder Jack Bogle liked to say in bear markets: Don't just do something, sit there!
Regards,
Ted
https://www.morningstar.com/articles/957544/funds-that-went-from-worst-to-first

catch22

For new and seasoned investors, the rule of "do your homework" still applies, eh? Read as much as you need for your understanding comfort level, and ask questions about a particular investment to be comfortable with the fit in your perception of risk tolerance and how the investment fits into a portfolio for your age and other financial circumstance. In the below case I knew there must be a typo. FAGIX had a loss of -5.79% in 2018 and is YTD about +15.4%. A -5.79% loss for 2018 became a -58% (very close number types with throwing away a decimal and rounding). Yup, we all have brain farts from time to time.

So here's the deal. I read the linked article from the perspective of a seasoned individual investor/boomer familiar with FAGIX. I also thought about the article from the perspective of a relatively new investor attempting to understand investments. Mr. Kinnel starts the write directing the reader to only the years of 2019 and 2020 and possible investment scenarios for the funds mentioned. He writes in the EXAMPLE below of FAGIX rebounding from a 58% loss.

FROM Russel Kinnel: As investors review their results for the year and plot a course for the future, some will no doubt be tempted to dump the holding that did worst and reallocate that money to the managers who did best. Yet a review of the greatest turnarounds this year suggests that your biggest winner in 2020 might be one of your biggest disappointments from 2019. At a minimum, be sure you aren't selling simply because the fund's style is lagging.

EXAMPLE from the article:Fidelity Capital & Income (FAGIX) is yet another Notkin vehicle. In this case, it's a high-yield bond fund that rebounded from a 58% loss to a 15.2% gain. As I mentioned, the equity version has higher highs and lower lows, but the drivers are similar. Notkin has about 20% of the fund in many of those same stocks as Fidelity Leveraged Company Stock, and his aggressive style is on display with his bond selection, too.

Good evening,
Catch

Gary

About Russel Kinnel

Junk journalism - much ado about nothing I would suggest he use at least a five year time frame!!!

With a bachelor's degree in economics and journalism from the University of Wisconsin-Madison under his belt, Russel Kinnel began his career at Morningstar in 1994. Fifteen years later, Russ is now Director of Mutual Fund Research and Editor of "Morningstar® FundInvestor," a monthly print newsletter for individual investors. He also oversees Morningstar's Fund Analyst Picks & Pans, writes the "Fund Spy" column for the company's investment Web site, and pens a monthly mutual-funds column for "Kiplinger's Personal Finance" magazine.