My latest quarterly Lemon List, a list of the worst performing mutual funds, now is available online.
And 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 in what was a very bad quarter for equities.
One of those widely held funds is the Fidelity Growth and Income Fund (FGRIX). This large-cap core equity fund has assets of more than $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%.
Assess this lemon fund with a comparable ETF such as the SPDR S&P 500 (SPY). The SPY 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 money. Of course, in hindsight you would have been much better off with a 100% cash position during that same time period.
If you find your mutual funds are underperforming their category average, you might need to do a little shaking of your own lemon tree. Of course, the first step is knowing what lemon funds you own, and that’s where my Lemon List can help.