Skip to main content
No. of Recommendations: 4
One would hope that investors are well aware of this phenomenon. Selling losing investments or out of favor shares can be a problem for funds, who usually own so much they must sell to other pros (as selling on the open market can take a long time or have a major impact on share values). Sometimes there are funds that will accept out of favor investments as part of their strategy. Value investors in equities. What do you call them in bond funds? Junk bonds.

The fund should be accurate in the quality of investments listed in the prospectus. If not, I would think you could easily sue them. So the message is read the prospectus carefully before you decide to invest.

As to fund families, think again. To unload unpopular positions it is easy to operate an orphan fund within the family that will buy anything. This is a technique to improve the performance of their well known and closely watched portfolios. Investors probably want to avoid these orphan funds, but you can bet the salesmen have clever sales pitches to sell their share--with great prospects to rebound in the near future.
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.