Cool. Interesting analysis there. So generally from the Sharpe Ratio we can see PSF is a better choice from historical data... and thanks for your bottom line suggestions..

(btw, main lottery is worse than gambling in terms of statistic.. heeh)

It isn't easy to manage a $17 billion mutual fund these days. No one knows that better than Harry Lange, who was just booted from the helm at Fidelity Magellan (FMAGX), the iconic mutual fund that Peter Lynch put on the map.

The Harvard MBA's tenure had been disappointing since he took over the fund in late 2005. It has truly been a lost decade for the rock star fund that had roughly $100 billion in assets before the tech bubble burst. According to Morningstar, Fidelity Magellan has underperformed 96% of the funds in its large growth category over the past five years.

Investors probably should have seen this coming. But many didn't.

My Fund Did What?!

Many Magellan shareowners may not even realize how poorly the fund has been doing lately. After all, actively managed mutual funds are attractive to investors that don't want to keep up with the market's daily gyrations. However, ownership can't be an entirely passive experience.

Even if you only check your fund's Net Asset Value every once in a while, there are four signs to watch for that should find you evaluating if you still want to be an investor in that particular fund.

1. There's a new fund manager
If you were drawn to the Fidelity Magellan fund by Lynch's performance, or after reading his intuitive books, you're 21 years too late. Taking Lange's place is Jeffrey Feingold, who will become the fifth manager of Fidelity Magellan since Lynch left in 1990.

It doesn't matter that there once was an investing legend at the helm. Whenever there's a change at the top, you can't assume the investing philosophy that attracted you to the fund will remain intact. Every manager that has taken the reins has reshaped the fund's portfolio to match his unique style. A fund's category won't change, but the thinking on buy and sell decisions probably will.

There are two reasons -- except retirement -- behind any change at the helm. If the manager is doing too well, she may be whisked away by a rival firm or decide to strike out on her own. If the manager is doing poorly, we don't need to ask why the baton is being handed to someone else. In either case, investors need to reassess their reasons for ownership.

Feingold may very well do a better job than Lange. It will be hard to do worse. However, this is still a defining moment for the fund and its shareowners.

2. The asset base is getting too big
It gets hard for a large fund to be successful, since the bigger it gets the more limited it is in the stocks that it can buy or sell without moving the market. Lynch was smart enough to go out on top.


For those scoring at home, Fidelity Magellan at $100 billion in 2000 -- 10 years after Lynch's retirement -- was too big. Even the fund's net assets of $17 billion today may be too unwieldy to effectively manage. Lange probably would have done a much better job with a smaller fund.

It's true that a fund's growth is typically tied to its performance. A market-beating vehicle will attract a healthy inflow of new money. However, there's also a reason some funds close to new cash when they get to a certain size, especially funds that specialize in small- or mid-cap companies.

This rule obviously doesn't apply to index funds, where it's the same basket of stocks being bought and sold.

3. The asset base is getting too small
I hate to get all Goldilocks on you, but too small can be just as problematic as too big. A shrinking asset base indicates either that a fund is losing money or that more investors are selling than buying. Most likely, it's a combination of the two.

The problem with this situation is that a manager often has to sell fund holdings -- often at the most inopportune time and with taxable implications -- to cash out investors requesting redemptions. You don't want to be the one left holding the bag.

4. Your fund is being merged into another fund
There are many reasons why a fund family might combine two of its funds:
A small offering may not be as cost-effective to maintain as the fund operator initially expected.
Investor interest just isn't there for the fund being absorbed.
There's a merger between two fund families.
However, by far the sneakiest tactic -- and a common one, too -- is to bury a fund's poor performance by merging it with one that has amassed a better track record.

This can be a problem to investors in both funds. Even if there isn't a culture clash in management styles or if the acquired holdings aren't being sold right away, the transition can be rocky. Some investors in the fund being acquired will be tempted to cash out, especially if the new fund has a much different objective than the one that they originally bought into.

Know Your Funds

There are plenty of other fundamental reasons for investors to bail on a fund. Management fees may be too high. Its asset allocations or investing strategy may not be right for you or for current market conditions.

Underperformance for short stretches is fine. No manager is perfect. However, routinely losing out to its peers is unforgivable in a world of plentiful alternatives.

It's your money. Do Lynch proud and take an interest in how it's being managed.

Looking for a good bond fund to invest now that many performing bond funds are closed.

Public Strategic Bond and Public Islamic Strategic Bond seem like good choices. Thoughts?

yup they are both gd bond funds, performed even @ their 1st yr. i tend to prefer the islamic

Both mentioned funds have 1 year return of 7%p.a. Not bad

Any particular reasons? I know the returns so far is a bit higher than the non-Islamic one.

there are some determining/guiding factors: sharpe ratio, alpha ratio, risk adjusted return etc. a fellow forumer, 'xuzen' is very well versed in these, i'm just researching/reading up with all these

Can a non bumi buy Islamic one?

My agent didn't recommend to me and invest Public Mutual Select Fund till now no return. making loss.

everybody oso cn buy islamic fund..unit trust is for long tern, mean min 3 years..i tink u shud jz buy it less than 1 year so u onli c it mk loss..be patient n doing DDI monthly..u wil c ur return slowly in coming years.

btw got public mutual select fund?are u sure?

Sorry Bro, It is Public Mutual China Select Fund.

I do DDI every month and agent send me report showing I am making loss.

Like FD is better than public mutual.

Lol, don't listen to agent. I bought a new fund last time according to agent's advice and it's still in the red. That was 2 years ago. I saw that it wasn't going anywhere on the 4th month and switched everything to Public Bond. Good move on my part.

public china select fund..IMHO..better do switching to stop your bleeding. take more stable n old fund like PRSF/PDSF..or aggressive fund like PSMALLCAP/PAGF..those fund performance not bad...

FD = low low risk = low low return and it always lose to inflation rate..

normally i wont buy new launch fund..i only pick the fund that perform more than 10 years..
some of the agent don't give you the right advice..but it's better if you can analysis yourself than just listen to your agent, cz its your money nt agent money, they wont care u r making loss or earn sometimes..

This post has been edited by desertkids: Feb 1 2012, 01:56 PM

bond fund less commision for agetns.

ask him why no recommend for bond. did u ask him abt bonds?

yes, non bumi can bays islamic funds.

select fund? which 1?

Public Mutual China Select Fund.

This post has been edited by Seremban_2: Feb 1 2012, 04:32 PM

i tink he didnt ask wat is bond fund..

min 3 years?
buy less than 1 year?
will see return in coming years?

The fund (China Select) was launched around 2007, now 2012, almost 5 years already.
What is the NAV now vs its initial launched NAV?

There is no such thing long term must make money, 3 years can make money, more than 1 year can see the return.

if who say doing investment sure untung then they definitely bullshit u!!!except our PM that annouce the SARA 1M fund that can gv u 20% pa return..

i say will c return when he didnt mention what fund he is buying. There are no fund cn give u guaranty return in how many years. the reason i ask him keep for 3 years & above is to calm him down when c market fall.(i duno when he buy his china select fund) Do u tink a market will keep on going down for 3 years & above?

im nt dare 2say sure c return in min 3 years..bt wat i noe is in 3 years time market sure wil go up n down..y u mz quit when da market is down n nt wait for it go up again..

fund selection n analysis is very important for investment..i keep my investment portfolio for more than 5 years dy..i nvr panic when market down n hapi wen market up..

I always think there was some incentive given to agents for promoting long investment periods. Seems for every year you are still invested, they will get commission from your investments. Up till 7 years I think or is it lower now?

ya they wil have incentive as long as ur money stil wif their fund house..up til ur money stil with them..cz every yr pb wil charge u min 1.5% management fee ma..

WOW! I thought only for a limited time after the initial investment.

So you mean to say as long as I'm always putting my money into the fund, the agent also got a cut for as long as I stay invested?

I'm tempted to ask my siblings to stop their contributions so that they don't pay to a useless agent that don't service them at all. Maybe they can exit and re-enter with a different agent.