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Get 'Em While They're Cheap

Four funds holding a slew of undervalued names

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The following commentary originally appeared in the Oct. 6, 2007, issue of Morningstar Mutual Funds, Morningstar's flagship resource for serious fund investors. Click here to learn more about Morningstar Mutual Funds.

Trying to time your purchases and sales of mutual funds is often a fool's errand. For one thing, it may not be necessary. That's because investors don't need to worry about buying or selling following a run of good performance, at least in theory; after all, the fund manager should be selling securities that are overvalued and replacing them with ones that are undervalued. That's an oversimplification, of course, but it gets to the appeal of actively managed mutual funds. Further, the delayed reporting of a fund's portfolio and a high level of trading actively make it tricky to say with much conviction whether a fund's portfolio is undervalued or overvalued at any one point in time.

Scott Berry has a position in the following securities mentioned above: DELL. Find out about Morningstar’s editorial policies.