Jeff Tjornehoj on "Business for Breakfast" 1060 KRCN Tuesday, October 24, 2006 - The Downside of an Up Market
Q: Jeff, the stock market has had a pretty good run lately, what with the Dow hitting another all-time high yesterday. Investors should be pretty pleased with how the year has progressed, right? A: Yes, it has been a good recovery. I figure, since the market low point this year--which was around July 21--the average stock fund is up nearly 9%. That's a decent run.
Q: So, smiling faces all around?
A: Well...not on everyone. I thought we'd take a look at the funds that have completely missed the rally. Some of these funds are very small, and when we look at their dismal performance it's not hard to see why.
Q: So, who makes the loser board?
A: Top honors (if you could call it that) for the worst post-bottom recovery go to the Ameritor Investment Fund. It has lost 66% since July 20, and its 40% expense ratio is the obvious culprit. Thankfully, it's been closed to new investors for some time, so no-one can accidentally fall into this death trap.
Q: That's unbelievable. Who else made the list?
A: An ETF called the United States Oil Fund. Natural resources funds have made about half of 1% since the bottom, but this fund has managed to lose 23%. It's basically a huge bet on oil, with futures contracts.
Q: Got another?
A: Of course. The American Heritage Growth Fund has lost almost 15%, while other multi-cap core funds have made an average of 9.2%. This fund must look to Ameritor for advice because it ranks dead last in its category for one-, three-, five-, and ten-year performance. That little matter of a 31% expense ratio doesn't help either.
Q: Interesting stuff. Thanks again.
A: My pleasure.
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