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Fund Spy

22 Mutual Funds That Scream 'Dump Me!'

Bad funds, bad funds, what ya gonna do?

Mentioned: , , , , , , , , ,

Premium Members of Morningstar.com know to head right to our Fund Analyst Picks and Pans lists because we cut right to the chase there and let you know what we think are the best and worst funds around.

Our methodology is quite similar for each list. For picks, we chose funds with strong competitive advantages such as good management, sound strategies, low costs, good stewardship, and strong long-term performance. Picks don't have to have all of those qualities, but they must be standouts in some areas and okay in the rest. Our pans are focused on funds with strong competitive disadvantages.

Over time it's become clear that our picks list is much more stable than our pans list because you can't just build up competitive advantages overnight. Our pans list changes quite a bit. Sometimes it's happy news--maybe a fund has made big changes and upgraded management or cut expense ratios. For example, AllianceBernstein has made progress on both fronts and only has a couple of funds left on our pans list now. However, more often pans come off because fund companies notice the same flaws we do and opt to kill off their mistakes. As a result, we're constantly on the lookout for new pans.

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Russel Kinnel has a position in the following securities mentioned above: AWSHX. Find out about Morningstar’s editorial policies.