Knowing When To Dump A Mutual Fund

The tiny $57 million Monetta small-company fund topped the charts with a 55.90% return in 1991, beating the Standard & Poor's 500-stock index by more than 25 percentage points. Not surprisingly, the money came pouring in, and the fund's assets ballooned to $524 million by 1993. But Monetta's stellar performance was achieved by deftly managing a small asset base, not a large one. So the fund has trailed the index an average of seven percentage points for each of the past four years. It has even fallen behind its peers--with a three-year annualized return of 12.89%, compared with 19.49% for the average small-cap fund. Time to dump Monetta? In short, yes. While small-cap stock funds are enjoying strong returns this year, Monetta again is no star.

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