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Brett Arends' ROI
Dec. 22, 2009, 12:01 a.m. EST · Recommend (2) · Post:
By Brett Arends, WSJ.com
BOSTON (MarketWatch) -- It was the worst of times, and it was the worst of times.
Say goodbye, and good riddance, to the Zeroes. For ordinary American investors this was the worst decade on record -- even worse than the 1930s, says Standard & Poor's analyst Howard Silverblatt. In real purchasing power terms, someone who invested in the market index ten years ago has lost nearly a third of their money.
But however badly your decade went, here's the good news: Chances are you did better than investors in the Frontier Microcap mutual fund.
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Last week the 87 investors who were left voted to wind this sucker up and distribute what was left in the pot. You can see why.
Total investment return over the past decade: minus-99%.
No, that's not a typo. Someone who started out with $1,000 in the fund at the start of this decade is left with enough for a few beers. They probably need it.
One should be wary of superlatives. This isn't the worst investment fund of the decade -- Mr. Madoff lost 100%. But it's close.
It did well briefly, during the dotcom bubble. Then it crashed with the market. Freedom Investors, run by Joel Blumenschein and Amy Siesennop, has been managing the fund since 2002, after the previous manager, James Fay, died. What's happened since?
"The value of the stock picks in the portfolio lost value," Siesennop, Freedom Investors' vice-president, explained, somewhat superfluously. "The stock picks deteriorated "
No kidding.
Blumenschein adds a bit of context. The fund's main problem was simply that it was so small, he said. The peak asset figure was just around $1.5 million. As a result its costs were too high compared to its assets (it is much more expensive to run a small fund than a large fund).
Frontier Microcap's expense ratio was a staggering 18%, and even at that level Freedom Investors was losing money. "Real performance did fine," insisted Blumenschein. "But once you throw (in) the expenses ... it got killed."
Either way, $1,000 get you $10. Call it symbolic. Frontier Microcap is my nominee for Mutual Fund of the Decade. It began with high hopes, and it turned into a disaster. Everybody lost.
Most disastrous funds are small ones you've never heard of (unless you're an investor, in which case you merely wish you'd never heard of them).
But for the last decade there's one exception to the rule: Fidelity Growth Strategies /quotes/comstock/10r!fdegx (FDEGX 16.16, +0.21, +1.32%) .
- SuperMario | 8:55 a.m. Today8:55 a.m. Dec. 22, 2009
NEW YORK (MarketWatch) -- Poor Super Saturday.
10:59 a.m. Today10:59 a.m. Dec. 22, 2009 | Comments: 1
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