Nine open-end mutual funds out of a select screen have 20% or more of their assets in a single stock, and have suffered as a result, TheStreet.com reports. The website screened for funds with minimum initial investments of $50,000 or less and that aren’t structured as funds-of-funds.
With 20.8% of its assets invested in Amgen, the ProFunds Biotech Ultra Sector Fund has delivered a negative 15.62% return over the past year, primarily due to Amgen’s 23% decline.
Even Fidelity Investments, of all companies, is guilty of this poor judgment, according to TheStreet.com. The Fidelity Select Construction and Housing Fund, which had 21.8% invested in Home Depot, is down 11.37% over the past 12 months, has only returned 0.45% in that time.
One fund was rewarded for its high concentration in a single stock, however. The ProFunds Oil & Gar UltraSector Fund—which had 24% invested in Exxon Mobil—is up 17.5%. Exxon rose 26% in that period.
On the bright side, however, none of the funds invested in speculative stocks, and three of the funds had General Electric, a diversified holding company, as their biggest holding.