Cemetery Crosses Graveyard

Record Numbers of Funds Blown Up in Market Minefield

Cemetery Crosses Graveyard

Yesterday, we told you that Vanguard announced plans to close and liquidate two of its funds. Could this be a harbinger of more funds throwing in the towel in coming months if the down market continues? How bad is it out there? Let's take a look.

As of the end of March, there were 40 fund liquidations so far in 2001, according to a study released by mutual fund data provider Wiesenberger. That's a pretty good clip, until you consider that 2000 broke the record with 225 funds dissolving. With over 12,000 total mutual funds out there, that means that nearly 2% of funds were liquidated in 2000. The previous record was set in 1998, when 222 funds went down.


Source
: Wiesenberger - Thomson Financial, includes 2000 and Q1 of 2001

The past 15 months have been no cakewalk for the market, to be sure. Since the beginning of 2000 through 3/31/2001, the S&P 500 has lost 21.03%. Let's take a look at which types of funds absorbed the brunt of the recent hatchet job.


Source
: Wiesenberger - Thomson Financial, includes 2000 and Q1 of 2001

With many funds hanging on by a thread right now, the above chart will undoubtedly look different if redrawn a few months from now.

Where are all the tech funds? you might ask. According to the study's author, Ramy Shaalan, they are getting by on assets they raked in during the heady bull market spree. However, he says the days may be numbered for many of these beleaguered funds.

Finally, let's take a gander at the fund shops that made it on the "ugly" list.


Source
: Wiesenberger - Thomson Financial, includes 2000 and Q1 of 2001:
*does not include announced Vanguard liquidation of 2 funds