I stumbled across IFOFX which is a Large Cap Fund of Funds aptly titled Integrity Fund of Fund. A fund of fund invests in a combination of other mutual funds. One would think this would create an economy of scale and allow Integrity's management to stand on the shoulder of some pretty darn good Large Cap funds.
Here's a list of their top 25 holdings:
http://portfolios.morningstar.com/fund/holdings?t=IFOFX®ion=USA&culture=en-us ![image](http://content.screencast.com/users/smhag/folders/Jing/media/d3a947f8-1de7-40d2-8203-0bdf28e9710f/2012-09-18_1236.png)
Using M* chart tool I charted each of these funds against the Integrity fund of fund. Each individual fund outperforms the fund of fund most of the time...so what gives? Shouldn't IFOFX fall somewhere in the middle of all its components? Apparently it can't even beat SPY...as a closet index fund.
![image](http://content.screencast.com/users/smhag/folders/Jing/media/9708dff2-f8a0-4a98-9a7c-2af41d996fe1/2012-09-18_1247.png)
It looks as though the fund got its start back in 1995 and for some reason still has investors in 2012. What hurts this fund's performance is not its portfolio...all very good mutual funds but, it management.
In order to invest in this fund an investor first needs to cough up a 3% load and then pay an ongoing expense ratio of 1.65% which, by the way, M* categorizes as average. As a result, whatever alpha may have been generated with this strategy is skimmed off the top by the Integrity management team.
Where's the integrity in this fund company?
Comments
Examples : PGMDX, PAUDX. Funds of Funds. They are trying to achieve a specific goal. Even FUNDX has some "momentum" thingy going for it (or not) if you believe in that kind of thing. IFOFX name itself is telling you it is unnecessary.
Here's a sucky fund I own. This is actually insult to injury and worse than IFOFX. It is SARIX, used to be NARFX. See how its funds have done compared to its YTD performance.
The argument is not about to FoF or not to FoF. It is about the most honorable FoF managers or the most unnecessary ones