Should You Stick With Managers Having a Subpar Year?
Getting beyond these three funds' low, low 2007 rankings.
It's no secret that some of the better mutual fund managers are having a tough year thus far in 2007. Not willing to leave the task to others, Bill Nygren of Oakmark Fund (OAKMX) and Oakmark Select (OAKLX) told everyone himself how lousy his funds have performed in a letter to shareholders posted on Oakmark's Web site. And the financial media has made sure that you know that Bill Miller's Legg Mason Value (LMVTX) is again lagging the S&P 500 Index and nearly all of its peers, just as it did in 2006.
Regular readers of Morningstar.com know that we still have confidence in those top-level managers. But the big names aren't the only ones struggling this year. Several less-well-known managers of funds in Morningstar's large-blend category currently share space in the basement with Nygren and Miller.
In such cases there's always one caveat and two key questions. The caveat: One year, or part of a year, is too short a time period to properly evaluate any fund. The only reason we occasionally highlight such situations is because we know many shareholders, or other investors, are curious to know the answers to the two questions that arise in these situations: What accounts for the lousy showing so far, and more important, are these funds still worth owning or does their short-term struggle actually result from a deeper problem?
Gregg Wolper has a position in the following securities mentioned above: OAKMX. Find out about Morningstar’s editorial policies.