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Top 10 Nonsense Funds of the '90s

The most recent decade hasn't cornered the market on dumb fund launches.

John Rekenthaler, 01/08/2010

Mr. Culloton threw down the gauntlet.

In submitting his list of the Dumbest Fund Launches of the 2000s, Dan said that I couldn't come up with an equally silly list from the 1990s. I understand why he was cocky; after all, his was the decade of Britney, Paris, and the reality TV. And he did indeed assemble an impressive collection feculence. GenonomicsFund.com. Thrasher Funds Gendex. Congressional Effect Fund.

Congratulations, Dan. I dub thee the Duke of Dreck.

But I am not entirely unarmed. In 20 years, my son will repeat his father's very words by telling his children how his generation from the 1990s was sober, intelligent, and responsible, unlike the current generation. And he will be wrong, just as his father was. The '90s were putrid, Dan. I'm here to show you why.

Reason #10: Shearson 1990s
Debuting in February 1990, this visionary fund promised to participate in the decade's upcoming trends, which carried Disneylike names such as Age of Peaceful Existence and Focus on Environment. Unlike Walt's attractions, however, this fund was built for the quick buck, and when its performance got off to a slow start, management quickly bailed. The Fund For The Decade lasted . until 1993. Shearson didn't fare much better.

The '90s excelled at long-term promises and short-term mind sets. A few years later, Excelsior launched three funds entitled Aging of America, Communications and Equipment, and Global Competitors. But America didn't age much during the lifetime of these concept funds, which were shut down far before the decade ended. Then there was Mentor Perpetual International. It lived for 21 months.

Reason #9: IPO Plus Aftermarket IPOSX
This particular high concept was notable because it had the full support of academic literature. A bevy of studies had demonstrated without a doubt that in the first year or two after their initial public offerings, newly minted stocks performed much differently than the rest of the market. Worse differently. That's right, this fund targets the highest-risk, lowest-return segment of the entire stock market.

And it has the performance to prove it. The fund roared out of the gate in 1999 with a 115% gain, which it promptly squandered with back-to-back annual losses of greater than 40%. In the nearly 11 years since inception, its performance is negative, including an eyepopping trailing average annual decline of -9.5%. Annual expenses of 2.5% round out the tale.

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