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The 10 Funds Suffering the Biggest Exoduses

Wait, some of these are keepers.

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In my last column, I looked at funds with the greatest inflows in dollar terms for the first half of 2008. This time, I am looking at the funds with the most net redemptions. You might well own one of these and are wondering what you should do.

1.  Schwab YieldPlus Investor (SWYPX)
Net outflows of $4.8 billion or 73% of assets.
We've discussed this fund here and here, so I won't beat a dead horse. It's a troubled fund where outflows made a bad situation much worse and you're probably better off bailing.

2.  American Funds Washington Mutual (AWSHX)
Net outflows of $3 billion or 4%.
The good news is that in percentage terms the redemptions aren't that great. The better news is that this is a great fund with a valuable dividend focus. However, the fund modestly lagged its peers from 2003 through 2006, which explains the lackluster reception the fund has gotten even though more recently it has modestly outperformed. I have as much faith in it as I do in the four American Funds that are on the list of biggest inflows.

3.  Fidelity Dividend Growth (FDGFX)
Net outflows of $2.9 billion or 20%.
Charles Mangum's emphasis on steady growing blue chips has made the fund singularly out of step with the markets this decade. Yet he has done quite well when the markets like that style and the fund is now free from the problem of asset bloat that once worried me. I understand why people are throwing in the towel, but there may yet be life in this fund.

4.  Fidelity Growth & Income (FGRIX)
Net outflows of $2.8 billion or 14%.
Our Fidelity expert Chris Davis summed it up nicely: Fidelity Growth & Income may be better than it looks, but it's not best of breed. I couldn't agree more. This fund will see better days but it's not compelling.

5.  Fidelity Low-Priced Stock (FLPSX)
$2.7 billion or 8% of assets.

This is a different story. Manager Joel Tillinghast is one of the best but the fund is in redemptions because Fidelity hard closed the fund. Thus, there are natural withdrawals that can't be replaced by new accounts. As long as the flows aren't great enough to start driving up trading costs or tying Tillinghast's hands, I'm not worried.

6.  American Funds Investment Company of America (AIVSX)
Net outflows of $2.5 billion or 3%.
This is another good American fund that you'd be wise to hold.

7.  PIMCO Floating Income (PFIAX)
Net outflows of $2.5 billion or 64% of assets.

This fund seems to be getting redeemed in part because it was misunderstood. As the name implies, the fund's yield floats with interest rates so it behaves quite differently from most funds with very short duration. I don't see much use for it for individual investors but it's a fine fund for professionals who understand how it works.

8.  Templeton Growth (TEPLX)
Net outflows of $2.5 billion or 7%.
This fund has disappointed with management changes and sluggish returns. Its excuse had been that it had less in emerging markets--but this year that's a good thing and it's still lagging. Still, Templeton usually turns things around so I'm not counting it out.

9.  Legg Mason Value (LMVTX)
Net outflows of $2.4 billion or 15%.

See my piece on the subject here.

10.  Fidelity Advisor Diversified Intl (FDVAX)
Net outflows of $2.3 billion or 15%.

It's not much, but the fund is outperforming its peers by about 70 basis points following two grim years. Like Fidelity Growth & Income, it's hard to get excited about this fund. Still, if it does finish the year ahead of its peers, that will mean that Penelope Dobkin has outperformed in two of her four full calendar years at the fund, so it's hardly a disaster.

Top 10 Funds by Net Outflow ($ Mil)


Assets 12/07

Assets 06/08Net CF YTD 2008Net CF YTD 2008 as % of 12/07 Assets
Schwab YieldPlus Investor (SWYPX)Ultrashort Bond6,574604-4,785-72.80%
American Funds Washington Mutual (AWSHX)Large Value82,42469,503-3,009


Fidelity Dividend Growth (FDGFX)Large Blend14,4919,889-2,942-20.31%
Fidelity Growth & Income (FGRIX)Large Blend19,20813,029-2,801-14.59%
Fidelity Low-Priced Stock (FLPSX)Mid-Cap Blend35,23029,727-2,670-7.58%
American Funds Invmt Co of Amer (AIVSX)Large Value89,25076,609-2,514-2.82%
PIMCO Floating Income (PFIAX)Ultrashort Bond3,8991,187-2,511-64.41%
Templeton Growth (TEPLX)World Stock36,91628,919-2,489-6.74%
Legg Mason Value Prime (LMVTX)Large Blend16,5069,696-2,408-14.59%
Fidelity Advisor Diversified Intl (FDVAX)Foreign Large Blend15,09111,399-2,268-15.03%



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