Are These Top-Performing Mutual Funds Worth Owning?

Recent winning returns alone shouldn't earn a fund a spot in your portfolio.

Stock mutual funds have been defying the laws of chance lately. In the second quarter of 2012, the average U.S. general stock fund lost 4.6%. Standard & Poor’s 500-stock index lost just 2.8%. For the year that ended July 31, the average U.S. fund returned 2.1%, while the S&P 500 gained 9.1%. Fund managers would have gotten better stock- picking results by throwing darts at a newspaper stock table. Over five years, the picture is a bit better but still uninspiring. The average U.S. stock fund returned 0.6%; the S&P gained 1.1%. For this we pay fund managers big bucks?

SEE ALSO: Our Favorite No-Load Mutual Funds

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

To continue reading this article
please register for free

This is different from signing in to your print subscription

Why am I seeing this? Find out more here

James K. Glassman
Contributing Columnist, Kiplinger's Personal Finance
James K. Glassman is a visiting fellow at the American Enterprise Institute. His most recent book is Safety Net: The Strategy for De-Risking Your Investments in a Time of Turbulence.