Latest Lemon List Reveals 2,335 Mutual Funds with $718 Billion in Sour Assets

Since 1998, every quarter Doug Fabian has been publishing a Lemon List of mutual funds--those funds that have underperformed their peer group average for the past 12 months, and also for the past 3 and 5 years. Investors are advised if they own a Lemon Fund to upgrade to a better performing fund or an exchange-traded fund (ETF) equivalent.

Huntington Beach, CA (PRWEB) May 1, 2009 -- Doug Fabian gives non-conventional, yet practical advice on how to easily improve portfolio performance, even in a slumping economy and a volatile market.

Fabian, Editor of Making Money Alert (http://www.makingmoneyalert.com/), and President of Fabian Wealth Strategies (http://www.fabianwealth.com), has just released his hotly anticipated quarterly Mutual Fund Lemon List (http://www.mutualfundlemonlist.com) for Q1 '09. This quarter's Lemon List contains 2,335 mutual funds totaling $718 billion in assets. To be classified as a lemon, the fund must pass strict screening criteria: it must underperform its peer group average for the last 12 months, as well as for the last 3 and 5-year periods.

Top 10 Worst Funds on Fabian's Lemon List according to Asset Size - See attachment for more detail:

Fund Asset Size

In Millions - Fund Name

$25319.20 - Dodge & Cox Stock

$22602.70 - American Funds Bond Fund of Amer A

$15529.10 - Fidelity Magellan

$13455.10 - Davis NY Venture A

$12713.50 - Fidelity Equity-Income

$12018.90 - Dodge & Cox Balanced

$ 9721.00 - T. Rowe Price Equity Income

$ 8969.80 - Franklin Income C

$ 8871.70 - Fidelity Freedom 2010

$ 8501.00 - Fidelity Investment Grade Bond

This quarter, out of a universe of 2,335 lemon funds, more than 30% or 730 total had negative annualized returns over the past 10 years. Historically stellar funds like Fidelity Magellan and Fidelity Growth & Income did not even perform as well as the S&P 500 (SPY) over the past 10 years.

"Investors need to wake up to the reality that many mutual fund managers do not perform as well as many exchange-traded funds (ETFs) with the same investment objective," said Doug Fabian. "As a result, investors are losing money they cannot afford to lose right now."

ETFs offer liquidity, leverage, and much lower management fees when compared to most mutual funds. When choosing an ETF over certain mutual funds - significant savings could result.

Here are some examples of what $100,000 invested in a mutual fund vs. an ETF 5 years ago would yield:

Fidelity Growth and Income would yield $53,360 today, but the ETF equivalent (SPY) the fund's benchmark, would yield $77,308 or a difference of almost $24,000!

American Funds Bond Fund of America A today would yield $99,529, but the ETF equivalent (AGG), would yield $118,727 - a difference of $19,198.

Putnam Vista A would yield $67,461 today, but the ETF equivalent (IJK), would yield $86,277 - a difference of $18,815.

For additional examples of how exchange-traded funds outperform mutual funds, see the attached chart.

There's no reason to continue investing in the worst-performing mutual funds. Find out if you own one of these toxic investments. For the complete list of Lemon List funds, go to MutualFundLemonList.com (http://www.MutualFundLemonList.com).

About Doug Fabian:

Fabian is Editor of Making Money Alert, Successful Investing, and President of Fabian Wealth Strategies, a fee-only investment advisor specializing in exchange-traded funds. Once a mutual fund advocate, Fabian is now recommending ETFs to subscribers of his advisory services, for his managed accounts, and for his own personal accounts. Fabian's Lemon List of Mutual Funds can be found at MutualFundLemonList.com (http://www.MutualFundLemonList.com).

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