AboutWarren Boroson Expertise Author of "Keys to Investing in Mutual Funds" (Barrons), "Ultimate Mutual Fund Guide" (Probus), "How to Pick Stocks Like Warren Buffett" (JKLasser), and "The Reverse Mortgage Advantage" (McGraw-Hill). Former financial columnist for Gannett News Service.
Experience Author of 20 books; winner of 1996 Personal Finance award from Investment Company Institute and Washington University. Formerly on staffs of Money and Sylvia Porter's Magazine. Had a radio program (on WEVD) about mutual funds and a newsletter, FundDigest.
Expert: Warren Boroson Date: 10/6/2007 Subject: Mutual Funds - Time to Sell
Question I have recently purchased four mutual funds. I've just received my month of September statement. It has only been one month but I feel they are under performing. How long should I give it before I decide to sell?
Thank you,
Frank
Answer Dear Frank:
One month is generally much too short a time.
First, are you comparing the funds' performances with those of their appropriate indexes and with the performances of similar funds?
Second, has anything happened to the funds? Have the managers left? Were the funds heavily into subprime mortgages?
Third, do the funds have a history of ups-and-downs? This is normal for value funds, which buy unloved stocks and wait for other investors to fall in love again.
Fourth, what does Morningstar write about those four funds? Consult M* at a library.
In any case, the usual advice is: Give a good fund two years to prove itself.
My own advice: If the fund is in a taxable account and you have a significant loss near the end of the year, sell it for a tax deduction and then, perhaps, buy something similar.
Tell me the names of the funds, by the way.
