It’s Fabian Lemon List time again, and that means it’s time to take the top 10 underperforming lemon funds to task.
If you don’t know what a lemon fund is, let me explain. A lemon fund is a mutual fund whose performance isn’t living up to its peers. When I say a mutual fund’s performance, I am talking about its average annual return during a given time period. When measuring the performance of a mutual fund, we look at a fund’s one-year annual return, its three-year average annual return and its five-year average annual return.
Looking at mutual fund performance over one year, three years and five years allows us to really see which funds are performing well over several distinct time periods. It also allows us to see which funds are in need of a tune up.
When it comes to the standard by which each fund is judged, you have to compare apples to apples — or, in this case, you have to compare individual mutual fund performance with that of its benchmark.
We define a mutual fund’s benchmark as the average performance of all of the funds in that mutual fund’s category. In this context, a category means a mutual fund’s objective.
For a fund to make it onto the Lemon List, it must under perform its category (objective) average for each of the time frames measured: one year, three years and five years.
If you think Q1 was bitter for stocks, then it was really sour for this quarter’s lemons. All told, there were 2,144 funds on the Lemon List, totaling $870 billion in assets.
Things were particularly bad for the 10 largest Lemon List funds. If you are currently invested in any of the funds in the table below, my advice is to get out while you still can.
Name |
Ticker |
QTR |
1YR |
3YR |
5YR |
Fidelity Equity-Income |
FEQIX |
-9.7 |
-9.4 |
5.73 |
12.35 |
Templeton Growth A |
TEPLX |
-11.8 |
-10.5 |
5.78 |
14.81 |
Fidelity Growth & Income |
FGRIX |
-10.37 |
-9.27 |
1.73 |
6.55 |
Fidelity Dividend Growth |
FDGFX |
-9.93 |
-9.16 |
4.12 |
8.2 |
Vanguard Windsor |
VWNDX |
-12.48 |
-15.86 |
2.67 |
11.35 |
Van Kampen Comstock A |
ACSTX |
-8.9 |
-11.53 |
3.06 |
11.76 |
Vanguard Asset Allocation |
VAAPX |
-9.44 |
-4.11 |
6.19 |
11.3 |
Longleaf Partners |
LLPFX |
-10.89 |
-13.2 |
4.17 |
10.29 |
Fidelity Investment Grade Bond |
FBNDX |
-0.52 |
0.72 |
3.32 |
3.4 |
Vanguard Pacific Stock Index |
VPACX |
-8.18 |
-7.87 |
10.39 |
18.15 |
For the complete version of the new Q1, 2008 Lemon List, click here.
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