3 Funds That Are Worse Than They Look
Don't let these funds' stellar recent returns obscure their underlying deficiencies.
Susan Dziubinski: In a video that aired a couple of weeks ago, we examined three funds that were better than they looked. All three had lousy star ratings but strong fund analyst ratings. Today, we're doing just the opposite. We're looking at three funds that aren't as good as they might first look. These funds all earn 5-star ratings but just Neutral fund analyst ratings.
Robby Greengold: Fidelity OTC is a large-cap growth fund that currently earns 5 stars. That's a reflection of excellent historical performance relative to its category. For example, the fund beat 95% of its category over the past five years. And that outperformance is mostly attributed to bold bets made at the stock level. For example, the fund held a hefty stake in Tesla from 2016 to mid-2017. That was an excellent time to be in the stock.
Susan Dziubinski does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.