Every Stock Mutual Fund Lost Money in 2008 But One
Here’s another one of those bizarre stats of the year for you:
Out of the 11,585 U.S. and international stock mutual funds tracked by Morningstar Inc., 11,584 have lost money in 2008, according to fund data through Nov. 20.
In other words, just one fund hasn’t lost money this year—and that is the APX Mid Cap Growth Fund, which was flat through Thursday’s close. That’s right, folks, its return—or lack thereof—is a mere zero thus far in 2008.
Given that most equity mutual funds are required to be fully (or 90%) allocated, its really no surprise. But its such a stark statistic, I thought it was worth mentioning.
Pretty wild . . .
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Source:
Every Stock Mutual Fund Has Lost Money in 2008, Except One
Lauren Young
Business Week, November 21 2008
http://www.businessweek.com/investing/insights/blog/archives/2008/11/every_stock_mut.html
November 23rd, 2008 at 7:48 am
Remember Bill Miller?…used to be the “legendary value investor” beating the S&P for 15 straight years. But in late 2005, I noticed his firm Legg Mason owned 25% of Amazon.com…Barry mentioned the other day of a fund owning that much of a company after a merger and it was ridiculous. That told me to stay away from this fund company. Miller stayed away from energy and bought financials and homebuilders…oy!
He owned massive stakes in fannie, freddie, citi, sears, merrill…and he holds for the long term. His flagship fund is down close to 64% YTD, 19% below the S&P.
November 23rd, 2008 at 8:10 am
Barry,
A couple of times you wrote about Citi’s Panic/Euphoria Model. If you review its history, it said there was panic in March (time to buy) and Euphoria in May (time to sell). That would have worked out really well. What does it say now? If you say sheer panic, you are WRONG!!…with the recent range of plus/minus .6, we are actually closer to Euphoria than Panic.
November 23rd, 2008 at 8:33 am
What I’m really interested in is seeing the average loss of the mutual funds against the broad average. I would bet that days of outperforming the market are done.
November 23rd, 2008 at 8:50 am
BR- Sorry to bet OT here, but here I went to the Typepad site and the last post was this about screamin’ Jim Cramer on real estate .
November 23rd, 2008 at 8:52 am
SB,
those are interesting points re: Bill Miller y Legg Mason, the PR surrounding him/that firm got so thick, it’d put your favorite hagiography to shame.
it’s something that MutFund ‘di-vestors’ never seem to realize–those Mgr.s get paid no matter how their ‘Fund’ performs/they act like Bill Miller has his 9-10 digits at work, riding in lockstep, with the ‘Fun(d)’ he opens to the hoi polloi..
it is, way too often, with far too few exceptions, such a criminal Op..Good thing the SEC is on Cuban’s case–that’ll safeguard the Republic (riight!)
November 23rd, 2008 at 8:59 am
Something to consider very carefully. Think about how many hedge funds are in cash. Then, think about where that cash actually is:
1) Banks
2) Money Markets
3) CDs
4) Treasuries
What a way to fix the banking crisis. People got scared into holding cash. Exactly what is needed to fix the problem and allow more loans to people with good credit and businesses who need them. Is there enough cash now on the side for banks, CDs and money markets. I don’t know.
People aren’t taking it out of banks and bringing it home and placing it under matresses. Our bank accounts have linked direct deposits today for both income and bill pay. I have Sovereign, one of the likely to go under banks, and I haven’t moved anything out of there.
The markets are now 50% down from the peaks. I expect SEC and FTSC to change the game again soon and be another terrible wake up day like when shorting financials became illegal.
My malls were decently busy this weekend. People were buying stuff. I’d like to see more people holding bags of purchased merchandise. It looked slightly recession like but let’s see how it is when we get to Black Friday.
November 23rd, 2008 at 9:44 am
JM:
Someone posted a great piece last night on what a modern day recession might look like…people will likely still buy cheap clothes and fast food, so the malls will see traffic. They will have to slash healthcare, college tuition, monthly car and mortgage payments though…many will move in with relatives.
November 23rd, 2008 at 9:47 am
I meant modern day depression.
November 23rd, 2008 at 10:08 am
The number one question at parties and dinners is “where do I put my money?”. Most people are incapable of running their own money- i.e. buying individual stocks and bonds. With every fund in the toilet people are in panic mode. The panic does not stem from losses but the fear that there is no one to trust institutionally and that they cannot make up the losses individually. Not a pretty sight and thank god that the people that read this site are not in that situation.
November 23rd, 2008 at 10:20 am
Re: Bill Miller
I have some very strong opinions on why he’s underperforming, and I know the intarwebs are fairly anonymous, but not so anonymous that I feel comfortable getting into the gory details. Let’s just say two things: 1) his underperformance beginning in 2005 is not coincidental to my eyes, and; 2) value investors don’t load up on AMZN at a PE of 100 or refuse to sell YHOO at 5-6 times its value (if you recall, I said back in May I thought Yahoo was worth mid single digits. $9 is closer to $5 that $32, so…)
Re: Fund Managers
I wonder how many are underperforming their benchmark YTD. That 11,000+ number is misleading due to the A,B,C,E, Z and no-load shares floating around, and I bet if you broke it out into unique offerings it would be shocking – SHOCKING – just how bad things are.
November 23rd, 2008 at 10:23 am
BR,
just as a reminder: “Most people are incapable of running their own money- i.e. buying individual stocks and bonds. With every fund in the toilet people are in panic mode. The panic does not stem from losses but the fear that there is no one to trust institutionally and that they cannot make up the losses individually.”-from larster, above.
The number one question at parties and dinners is “where do I put my money?”.
November 23rd, 2008 at 11:01 am
I posted the Boston Globe article in a different thread. Here’s a reminder:
http://www.boston.com/bostonglobe/ideas/articles/2008/11/16/depression_2009_what_would_it_look_like/
It’s the best article I’ve read all week by far. Economically it isn’t much comfort, but socially it seems a little more realistic than “the end of the world as we know it” school of thought.
I didn’t comment much on the article itself – the huge glaring omission from the article is internet usage. Internet usage will surge and people may become more isolated offline, but will come together online (as we do here).
They talk about people staying home watching TV because it is the cheapest form of entertainment. I beg to differ. The variety of “entertainment” available on the internet exceeds anything that TV could ever offer. I suspect a lot of people will give up cable TV before they’ll give up internet (for some of course, the two are combined).
November 23rd, 2008 at 11:05 am
I track the 12 top performing Fidelity Mutal funds as of 12/31/07. They are, FNIAX FLSAX FNITX FBALX FEMKX FSENX FSESX FICDX FIGRX FNORX FPBFX FSEAX . You could buy one share of each fund for a total of $516.89. On Firday 11/21/08 you culd buy one share of each fund for total $219.54. A stunning drop of 57.5%
November 23rd, 2008 at 12:29 pm
Amazing that Morningstar has it rated as only worthy of 2 stars…
I guess you need to lose a lot more to get 5 stars
November 23rd, 2008 at 2:08 pm
I think it’s interesting the Rydex family of mutual funds isn’t considered as making money. They have a number of funds that play the market short.
November 23rd, 2008 at 2:23 pm
That is quite an indictment of ‘money managers’. The idea that you can look at trivial details about past performance of stocks to buy stuff with other people’s money -earning a fee for so doing – and then just sit there while the table tilts and everything slides off has proven to not be a good strategy. 11,584 mutual funds managed by people with their heads up their butts.
November 23rd, 2008 at 3:49 pm
According to todays NYT aricle “Love, jobs and 401(k)’s”, people are now consulting psychic’s for investment advice. I repeatr- the average person cannot run his own money.
November 23rd, 2008 at 4:11 pm
Gold (GLD) is also up.
November 23rd, 2008 at 5:02 pm
What is the fiduciary liability of portfolio managers who failed to protect the capital of their investors, pension holders, etc.?
Will mutual funds lose money/clients to ETFs, which give control to speculators?
State, municipal, corporate pension funds and many college endowments have performed as poorly as mutual funds. Are they protected from lawsuits for not protecting capital.
Can the boards of the funds be sued for obligating their money managers to be fully (90%) invested in equities? Were such rules set to ensure fee income for those mutual funds rather than to protect investors?
Will “institutional investors” be relabled “institutional speculators”?
Why doesn’t the M* data reflect bear market mutual funds, which are up 40% to more than 100% from 12 months ago? Yes, they’re small with the biggest having $189 million or so in assets, but they’re there.
With institutional speculators so wasted, do any have cash “on the sidelines” to put in the market when it rallies?
Lots to blog about, Barry. Hope you or someone has some answers.
November 23rd, 2008 at 5:17 pm
On the bear market funds, I screened Yahoo.com, which uses the M* screener, for stock funds up 50% or more in last 12 months and got about 20 that are up 51% to 106%. On Morningstar.com, more showed when I last looked a couple of weeks ago. Here’s a link to the screen results at yahoo.com:
http://screen.yahoo.com/a?cc=1%3B&nm=&proy=&mgrt=&rtmin=&rtmax=&retrmin=&retrmax=&risrmin=&risrmax=&trytd=&troy=200%2F&trty=&trfy=&mii=&mfl=&er=&namin=&namax=&tomin=&tomax=&mmcmin=&mmcmax=&vw=6&db=funds
November 23rd, 2008 at 5:19 pm
I didn’t lose any money either.
November 23rd, 2008 at 6:00 pm
I’m up 55% this year – and I don’t even do this for a living. Thank the chubby cheeked baby jesus for self directed 401k accounts and double inverse ETFs.
November 23rd, 2008 at 9:04 pm
This 1 fund was down 3% Friday and is now down YTD:
http://econompicdata.blogspot.com/2008/11/equity-struggles-1-in-11585-down.html
November 24th, 2008 at 4:35 pm
A few of the funds I own state in their prospectus that they can go into Treasuuries in uncertian times. Did any of the managers move to Treasuries? No!!!!! If not in this environment, then when?