A Lemon List Preview

July 9, 2008
By seadmin

My quarterly list of the worst performing mutual funds will be released very soon, but I wanted to give you, the Alert reader, a little preview example of the kind of lemon funds we’ve uncovered.

Believe me; you don’t have to look very hard to find some very big, widely held mutual funds that have found their way onto the Lemon List.

One of those widely held funds is the Fidelity Growth and Income Fund (FGRIX). This large-cap core equity fund has assets over $15 billion, and an expense ratio of 0.68%. In Q2 the fund lost a whopping 10.1%. During the past 52 weeks FGRIX lost 24.08%.

Now compare this lemon fund with a comparable ETF like the SPDR S&P 500 (SPY). This ETF has $78 billion in assets, and an expense ratio of just 0.08%. In Q2 the fund lost 7.03%. Not great, but much better than FGRIX. During the past 52 weeks SPY fell 15.6%.

As you can see, you would have been much better off investing in SPY than investing in FGRIX, and it would have cost you a lot less. Of course, in hindsight you would have been much better off with a 100% cash position during that same time period.

Next week, we’ll have a link to the complete Lemon List for Q2, and I assure you, the list is both long and infamous.

Log In

Forgot Password

Search