The director of research at Morningstar has advised investors to sell four mutual funds in a weekly "Fund Spy" column.
Saying that informed fund selling and buying decisions start with information like year-to-date performance and analyzing expense ratios, Russel Kinnel, director of research at Morningstar, said the Gabelli ABC, Phoenix-Engemann Balanced Return, ING Emerging Countries and Strong Balanced funds should be given the "heave ho."
Another factor in Kinnels decision was whether funds are sticking with their original strategies. "Say you own a fund for its small-cap exposure, and its your only small-cap fund," he wrote. "If it moves most of its assets to mid caps, you should consider selling or adding a true small-cap fund so that you wont lose that exposure."
As far as returns go, he suggested that if a peek at three- and five-year numbers shows low returns, the investor should look into the "why" rather than the "what." For instance, if the reason for the returns is bad strategy, Kimmel suggests that investors let go of the funds.