12 Shocking Mutual Fund Statistics
Enter the realm of the strange but true.
Think you know everything about mutual funds? "Then I have something to tell you which may shock and discredit you." (Lionel Hutz, The Simpsons) ... Or at least make you say "hmmm."
1. Bruce Berkowitz at Fairholme (FAIRX) and Fairholme Focused Income (FOCIX) has 140 times more money invested in his funds than Harry Lange has in Fidelity Magellan (FMAGX). We know this because Magellan's latest filing showed Lange with between $500,000 and $1 million in his fund. Meanwhile, the management company overseeing the funds has $148 million in his two funds. While it has two employees, Berkowitz had been the sole employee when the funds listed $139 million invested in them.
2. Fully 75% of the balanced funds with star ratings of 1 star in 2005 were wiped off the face of the earth in the ensuing five years. Now that's attrition. We found that 1-star funds were much more likely to be killed off than higher-rated funds. Why? Poor performance and resultant poor flows mean a fund isn't likely to be a money winner for the fund company. On the one hand, it's bad for fund investors that these records get swept under the rug. On the other, investors in bad funds are probably better off getting their money back or having their fund merged into another.
Russel Kinnel has a position in the following securities mentioned above: PTTRX. Find out about Morningstar’s editorial policies.