Want To Dump Your Fund(s)?

While individual investors have been credited with standing firm in the face of the stock market's gyrations this summer, analysts are expecting that may change once they get their latest quarterly 401(k) statements.
Managing Your Money
According to preliminary figures from the research firm Lipper Analytical Services, the average domestic stock fund dropped 15.02 percent in the third quarter, the poorest performance since a 16.07 percent loss in the third quarter of 1990.

As investors open their retirement fund statements, many may see the current high yields in bear funds as a safe alternative. And aggressive investors may look at emerging markets as an opportunity to buy on a huge dip.

But before bailing on your current loser, be sure to examine its long-term record. You might just find that the "haven" and the "dip" can both be found in the fund that you're already holding.

The Mutual Fund Quarterly Review released Monday by The Wall Street Journal named The Prudent Bear Fund (BEARX) the top performing fund for the period ending Sept. 30. A 21.93 percent return looks pretty good if your fund is currently sporting a negative number.

Second and third runner-ups - Profunds Ultrabear Investor (URPSX) at 17.88 percent and Comstock Capital Value (DRCVX) at 17.48 percent - look pretty good too.

The question for the long-term investor, however, is what will these funds do for me three, five or ten years down the road?

The picture isn't pretty based on prior performance. Founded in 1985, only the Comstock fund offers a real long-term overview. For the 10-year period this fund is down 0.7 percent. The five-year period is negative 10.1 percent and for three years the fund is down 7.4 percent. These guys even have the gall to charge a 4.5 percent load.

Top fund Prudent Bear is down 16.2 percent since its December 1995 inception and Profunds Ultrabear is down 3.5 percent since its November 1997 inception.

Bottom of the barrel losers for the third quarter have no long-term records to evaluate, but the regions that they're in should give dip buyers pause. Lexington Troika Russia (LETRX) faced the biggest third quarter loss with a negative 64.89 percent, actually faring better than its one-year return, down a sickening 89.9 percent.

Runner up for poorest performer is Vontobel's Eastern Europe Fund (VEEEX), down 40.48 percent for nine months and off 60.24 percent for the one-year period. Third place Montgomery Latin America (MNLAX), down 39.45 percent for the third quarter, is off 57.83 percent for the last 12 months.

The fractured economies that these funds invest in will probably turn themselvearound... someday. But can the funds themselves hold out that long - and even if they can, can you?

Written By Craig Tolliver