Look Behind You! 3 Scary Funds Are Sneaking Up on You!

Russel Kinnel: In the spirit of the season, I offer you three of the scarier funds we cover. Each one has some fundamental flaws that make them a bad bet. Sure, they’re still capable of a good stretch, but these funds might produce frightening results if things go south.

Look Behind You! 3 Scary Funds Are Sneaking Up on You!

1. Federated Hermes Kaufmann Large Cap KLCAX
2. Lord Abbett Multi-Asset Income ISFAX
3. Baron Partners BPTRX

First, there’s Negative-rated Federated Kaufmann Large Cap. We rate both People and Process Below Average at this fund. Manager departures and retirements have left the team depleted, and at the same time, the strategy has been all over the map as they aim for high-growth names, but they often sell them at just the wrong time. Making matters worse, fees are above average for this below-average fund.

Next, Lord Abbett Multi-Asset Income is an ambitious, wide-ranging fund, but its ambition outstrips its abilities. A small team makes allocation moves among many funds, but it lacks the depth to compete with other asset allocators and fund selectors. We rate it Below Average for People and Process, and Negative overall.

Finally, Baron Partners has actually produced good results, but succession issues here have us concerned. Manager Ron Baron is in his 80s and plans to hand off to his son, Michael Baron, at some point. We don’t know when. Younger Baron is well-versed in the strategy, but we don’t have a solo track record for him. This is a bold, focused portfolio, so the manager has a huge impact on the fund with that kind of concentration and freedom to move around. The fund, in fact, has 36% of assets in Tesla TSLA and typically just 20 to 40 stocks total in the portfolio.

Watch These 16 Standout Funds Are Making Big Bets. Do They Fit in Your Investment Portfolio? for more from Russel Kinnel.