Four Loser Funds Worth Sticking With for the Turnaround
You don't make a profit until you sell, as the old saw goes, but the opposite is also true. These four funds, while in the red, are worth holding on to.
Yes, a 3.2% loss for the past 12 months is disappointing, but I'm not pinning it on the "new guys."
Bob Rodriguez took 2010 off and then came back in more of a supporting role. Yet we have confidence in managers Dennis Bryan and Rikard Ekstrand.
Bryan has been with FPA for nearly 20 years and Rikard for 13, so they aren't really new or inexperienced. The fund, like Royce Value, has been hurt by a big energy investment, but that isn't out of character or inconsistent with Rodriguez's MO.
This closed fund figures to be a good bet in down or flat markets, as the firm is still focused on protecting against big losses while making modest gains in rallies.
Vanguard Precious Metals & Mining (MUTX:VGPMX)
Yes, the theme continues. Basic materials are having a tough go of it, as Europe's problems and signs of a Chinese slowdown are taking the air out of commodity prices.
More worrisome, though, is that this fund has red numbers going out all the way to five years. The fund's unusual combination of mining and metals means its past returns aren't easy to compare with the precious-metals category or the natural-resources category. In fact, the fund combines metals and mining indexes to create its own custom benchmark, and tellingly, the fund is actually ahead of that one for the past ten years.
Graham French is a skilled manager who gives us confidence in the fund, even if its relative performance figures aren't that useful. The fund works best as a broad inflation hedge or play on commodities.
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