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Fund Spy

Two Hot Topics, Two Woeful Funds

A climate-change fizzle and an emerging-markets flop.

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Sometimes, funds created to capitalize on the public's fascination with a particular topic or trend succeed in catching a wave. They provide eye-catching returns for a year or two before they disappoint. Others, though, disappoint right from the start--and continue to do so.

DWS Climate Change (WRMAX) seemed like a gimmicky idea to begin with. When its advisor staged odd marketing events--such as having snowboarders perform in Beverly Hills and building a replica Amazon jungle near Wall Street--it advanced the notion that this fund was not for serious investors. Even so, it could have succeeded, at least for a while. But it hasn't. Conceived when stock markets were riding high, the fund came out in September 2007, just as the markets were about to stage an epic collapse.

Unfortunately for its shareholders, the fund, which is available only through advisors, didn't merely suffer as badly in the bear market as everyone else. It did worse. From the beginning of the bear market in October 2007 through its end in March 2009, the fund plunged about 61%--5 percentage points more than the world-stock category average. Many funds that had especially severe losses during the crash at least bounced back far more strongly than their peers when the markets rallied from March 2009 to late April 2010. Not this one. DWS Climate Change managed to underperform in both the bear market and the rally. From March 10, 2009, through April 26, 2010, it gained 17 percentage points less than the world-stock category average.

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Gregg Wolper does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.