How to Keep Your Head When Your Fund Is Losing Its Tail
Reviewing some key items can help determine if a slumping fund has permanently lost its touch.
The crowd loves a winner and hates a loser. If a fund that has long been the former starts looking like the latter, the enmity seemingly doubles. There are obvious culprits, such as a big change in the process or the departure of key personnel, that are clear signals it is time to say "adios."
But what do you do with a fund where the only thing that's changed for the worse is its recent performance?
First, don't let emotion rule the day. (My colleague Christine Benz talks about keeping your worst instincts in check in this recent interview.) Rather, take a methodical approach that checks a variety of angles. There's no magic formula, but the broad themes below can help ensure that you use your head and not your heart when deciding whether to stay or go with a struggling fund.
Michael Breen has a position in the following securities mentioned above: OAKLX. Find out about Morningstar’s editorial policies.