3 Former Star Funds to Avoid

They were supposed to be among the best value funds around, but were savaged in the 2007-09 bear market. I'm still leery of them.

October 9 passed without most people taking any special notice. But mutual funds were watching. October 9, 2007, marked the start of the worst bear market since the Great Depression. Every day that passes now makes the five-year returns of mutual funds look just a bit better.

But I'll never forget that calamitous bear market, and I hope I never forget the lessons I learned. Most important: The idea that stock funds run by top-notch value-oriented managers would protect me in a severe downturn turned out to be wishful thinking. More than a few such funds produced horrendous bear-market returns. They turned out to be far riskier than I expected.

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Steven Goldberg
Contributing Columnist, Kiplinger.com
Steve has been writing for Kiplinger's for more than 25 years. As an associate editor and then senior associate editor, he covered mutual funds for Kiplinger's Personal Finance magazine from 1994-2006. He also authored a book, But Which Mutual Funds? In 2006 he joined with Jerry Tweddell, one of his best sources on investing, to form Tweddell Goldberg Investment Management to manage money for individual investors. Steve continues to write a regular column for Kiplinger.com and enjoys hearing investing questions from readers. You can contact Steve at 301.650.6567 or sgoldberg@kiplinger.com.