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Don't Bail on These Asset-Losing Funds

Despite net outflows during the past half decade, these equity funds are still worthy of your consideration.

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Hearing that a fund is experiencing significant outflows might give one pause as to whether to buy it, or cause shareholders to consider selling. If other investors are pulling assets from the fund, it must mean something's wrong with it, right?

Not necessarily. In fact, lousy funds aren't the only ones in which investors lose confidence. Sometimes quality funds lose assets, too. As discussed in this earlier Five-Star Investor article, a number of large actively managed funds have seen enormous outflows since the 2008 financial crisis--with selections from American Funds, in particular, taking a pounding. Yet several funds on the list carry Morningstar Analyst Ratings of Silver or Gold, meaning they are considered among the best in their categories, and a few have even been among the better performers in their categories during the past five years.

Adam Zoll does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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