Author Topic: How bad can a diversified mutual fund be?  (Read 1960 times)


  • Bristles
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How bad can a diversified mutual fund be?
« on: July 10, 2016, 08:31:27 AM »
My wife has had an IRA for many years that is totally invested in one mutual fund.  I have glanced at her statements over the years and noticed poor performance, but I would just shrug and figured things would even out in the long run.  I think it was a Dean Witter fund but it is currently Deutsche Large Cap Value Fund Class A,   symbol is KDCAX.    I know "Large Cap Value" has not done well for years,  but the underperformance of this fund is stunnning,  for a supposedly large cap diversified fund.

1 year return = -17.49%,  compared to -.09% for the Morningstar Large Value Index and +3.99% for S&P 500 TR USD index.
I just ran a "screen" on Schwab, sorting on average annual 1 year return and this fund turned up last of 130 funds in that category!! 

Turnover ratio is  121%  which ranks #11 of  131 funds.

If this was a brokerage account I think I would have a good case for accusing my broker of churning, and destroying my investment for his own personal benefit.  Do I have any legal recourse with a mutual fund?   I have advised my wife to sell this fund on Monday.   I had no idea this piece of garbage was this bad.  And to think there are "money managers" being paid to do this. 


  • Magnum Stache
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Re: How bad can a diversified mutual fund be?
« Reply #1 on: July 10, 2016, 08:37:51 AM »
Legal recourse? Probably not. There was a choice in purchasing it; there was information available as to what the strategy was and investments within the fund. You can have diversification and shitty investments at the same time.


  • Walrus Stache
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Re: How bad can a diversified mutual fund be?
« Reply #2 on: July 10, 2016, 08:48:49 AM »

It's at the very bottom for performance YTD and for 1, 3, 5 and 10 years.


  • Handlebar Stache
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Re: How bad can a diversified mutual fund be?
« Reply #3 on: July 10, 2016, 10:43:00 AM »
Man sorry to hear that. The good news is that you know right now and can prevent further damage.


  • Walrus Stache
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Re: How bad can a diversified mutual fund be?
« Reply #4 on: July 10, 2016, 12:21:06 PM »
It looks like an actively managed fund. The ER is about 1%. So that alone will hurt. And they only have 78 stocks in it. And it's very heavy oil/gas and a lot of healthcare too. Oil/gas has gotten killed. Some parts of healthcare have slowed down as well. It's not really that diversified. It's actually pretty concentrated.


  • Handlebar Stache
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Re: How bad can a diversified mutual fund be?
« Reply #5 on: July 10, 2016, 12:45:17 PM »
You should dump it.

I knew that when you said Waddell and again when I saw it was an A share class. By the time you said it was down so much I wasn't surprised.

You have no legal recourse. This isn't churning. If your advisor sold you this, and told you to switch to another A share a year later, and then again, and again... getting his 5% front end load each time.. that is churning. When you buy an expensive actively managed fund the fact that it can underperform the market is an expected possibility.

You can't really blame the money manager. He is competing against a lot of other money managers. Some are paid better, some worse, and they are all competing against each other and the market. Some will do very well. Most will not. You can pay 5% up front and 1% ongoing to play this game, or you can choose to earn what the market gives through indexing and that only costs 0.05%.