In March 2000, there were 275 funds delivering returns of 100% of more in the previous year. Twenty four of them delivered returns of 200% or more and the PBHG New Opportunities Fund rose a staggering 533%.
The Wall Street Journal took a look at the funds today and found that 35% of them, or 97, no longer exist; 44 were merged into other funds, 22 were liquidated and 31 disappeared from Morningstar’s database.
Of the 179 that still exist today, only 20% have surpassed the market’s average annual gain of 1.7% since 2000.
“The worst were those funds that were pedal to the metal and were paying little attention to the downside,” noted Christine Benz, director of mutual fund analysis at Morningstar. “Funds that held up relatively better have been run by fund managers that pay attention to risk control.”
Others that have done well have invested in overseas markets, particularly emerging markets.