Russel Kinnel, director of mutual fund research at Morningstar in Chicago, has pinpointed four struggling funds that have recently shown new signs of life. But looks can be deceiving, he adds.

For starters, there's American Century Gift Trust, an aggressive fund that has frustrated its shareholders in the past. It suffered three straight bottom-decile performances between 1996 and 1998 and then moved near the front of its class in 1999 before bottoming out again for four of the next five years. In 2005, it posted a "truly impressive" 22.05% return, Kinnel observed.

It appears the fund may have benefited from a managerial change in 2004, but Kinnel said he's still wary because as a "momentum fund," it has a harder time maintaining its success than its more traditional peers. Exiting the fund also requires a mountain of paperwork, Kinnel said, so for investors "there's not much point to sacrificing ease of sale when there are plenty of other good funds around."

Kinnel, however, likes the outlook for Fidelity High Income. Although the fund has a "crummy" five-year record, most of that was the result of a big telecommunications debt bet that went sour. Its new management team has a more conservative style, however, and Morningstar's bond analysts have visited with Fidelity's high yield group on a number of occasions. The fund charges a low 0.77%, which provides further incentive for investors.

Putnam New Opportunities A has also bounced back from dismal performances in 2000 and 2001, but Kinnel warned that the overhaul of the Boston firm's growth team "is still a work in progress." Besidens, Kinnel said, the fund's rebound was grounded in its work on small and mid-cap stocks, so he's a bit unsure how they'll do picking large-cap growth stocks in an all-cap strategy.

And then there's Vanguard U.S. Growth. Despite manager changes and Vanguard's attractive low costs, there's no ignoring its five-year string of woeful underperformance before bouncing back in 2005. And while there are positive signs, Kinnel said it's a fund that might require a little more time in the oven before it's ready for the table.

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