Will These Three Funds Regain Their Lost Glory?

While past performance isn't the best predictor of a fund's future prospects, many investors nevertheless give it a lot of weight. In fact, a fund on a hot streak can grow dramatically in a short span of time as investors bank on its continued outperformance.

That's why it's particularly painful to see a well-known fund that once racked up fine returns fall on hard times. Not only is its sliding performance tough to stomach, but the decline is also likely to affect a large swath of investors.

Let's take a look at three former highfliers that currently find themselves in a rough patch, with an eye toward assessing their future prospects.

 White Oak Growth Stock (WOGSX)
In many ways, this fund represented some of the excesses of the late 1990s. It owned a portfolio chock-full of expensive stocks, which it rode to marvelous gains. Meanwhile, assets poured in and the fund's advisor, Oak Associates, launched several new funds. In some important respects, though, this offering was very different from some of the fly-by-night operators who tried to cash in with aggressive funds at the time. Its manager had years of experience, and the fund operated with a long-term investment approach. Despite those positives, this aggressively positioned offering fell on hard times during the bear market. Though it enjoyed a strong year in 2003, many investors are no doubt questioning the fund's usefulness.

The bottom line: This fund is just too risky to have much appeal as a core portfolio holding. While it deserves credit for sticking to a clearly defined approach and may be among the best at executing a high-octane growth strategy, it's always been tough to fit into a portfolio of funds. In particular, the fund's makeup--and the volatility that results from it--is likely to encourage poorly timed investment decisions.

 Weitz Hickory 
When many value-leaning small-cap funds were struggling in the late 1990s, this fund's telecom stake kept it afloat. Since that time, however, the telecom sector has imploded, and former manager Rick Lawson has packed his bags. In his place, firm founder Wally Weitz has stepped in to right the ship, though Weitz has struggled to find ideas as the small-cap rally has lengthened. Moreover, big stakes in media and telecom stocks continue to dictate the fund's performance.

The bottom line: We think this might be one of the more interesting contrarian plays you could make right now. While we're somewhat concerned that Wally Weitz is overstretched (he also runs  Weitz Value (WVALX) and  Weitz Partners Value (WPVLX)) and that the firm's bench isn't as deep as it might be, we remain fans of his investment approach. If the fund stays small and Weitz gets a chance to put cash to work, this may well turn out to be a worthwhile investment.

 Fidelity Aggressive Growth (FDEGX)
It can't get much worse than it did for this fund between 2000 and 2002. It lost 27%, 47%, and 41%, respectively, in each of those three years, landing in the mid-cap growth category's bottom decile each year. That was a huge comedown for a fund that had soared under former manager Erin Sullivan. Under her leadership, the fund had grown to more than $15 billion, but she left to start a hedge fund near the market's peak in early 2000--right before this fund crashed and burned. However, new manager Rajiv Kaul, who came on board in late 2002, seems to have the fund on the mend again.

The bottom line: We're encouraged, but aren't ready to recommend this fund until it undergoes a full cycle under Kaul's leadership. While it has clearly demonstrated that Fidelity's research strengths keep it competitive in up markets, it has to prove it can do the same in less favorable environments. For now, Fidelity--among other shops--has better options available.