It’s time to identify ‘winners’ of the Lump of Coal Awards

CHARLES A. JAFFE TIMES-DISPATCH GUEST COLUMNIST
Published: December 17, 2008

After years of expecting a little something extra around the holidays, most people in the fund world are getting nothing extra for Christmas this year. That said, it's my job to fill some of those holiday stockings. The 13th annual Lump of Coal Awards go to:

Bruce Bent, co-founder of the first money-market fund and chairman of the Reserve Funds, forgetting that talk is cheap

For years, Bent railed against money funds holding anything riskier than Treasury bills and bank certificates of deposit. He ridiculed competition for buying commercial paper, short-term corporate debt that's routinely unsecured. But in 2006, his firm started buying the same things he once described as garbage. Reserve's money-fund yields climbed the charts; meanwhile, Bent continued ranting about the bad investment behavior of others, ignoring the fact that his funds had become the most dangerous of the bunch.

Holding $785 million in Lehman Brothers, Reserve's Primary fund was forced in mid-September to "break the buck" after that paper officially was declared as garbage in light of Lehman's financial troubles.

The Investment Company Institute, doing too little, too late

The money fund crisis came into full bloom in mid-September. The ICI established its money fund working group in November, long after the focus of the economic crisis had moved on to other parts of the financial world.

Every 2010 target-date fund, missing the bull's-eye

At the time when investors most needed life-cycle and target-date investing to work, it failed. Target-date funds are all-in-one portfolios built to age with an investor; the closer they get to the target date, the more conservative they become. The average 2010 fund is down nearly 30 percent this year.

Oppenheimer's target-date funds, the year's most off-target performance

Oppenheimer is last in its peer group for funds targeted for 2010, 2015, 2020 and 2030. By comparison, Oppenheimer 2025 is a star, standing next-to-last in its category. And Oppenheimer 2040 and 2050 didn't launch until March, but since their inception, both rank last in their peer groups, too.

Regions Morgan Keegan, not knowing when to quit

Two former high-fliers, RMK's Select Intermediate Bond fund and Select High Income, may have been the industry's biggest travesties over the past two years. Manager James Kelsoe had a huge slug of money in subprime paper, so that both bond funds lost more than 50 percent last year, then watched things go from bad to worse in '08.

RMK finally got rid of Kelsoe, but it inexplicably kept the funds open, with a new subadviser running the money.

Ron Fielding of the Oppenheimer Rochester Municipal funds, sticking to your guns when they're aimed at your own feet

The Rochester funds have traditionally flown high on the muni-bond performance charts, largely because of Fielding's penchant for diving into the riskiest portions of the bond market to gain extra yield. As a result, Fielding's funds took on a lot more credit risk than the competition. Predictably, results have been a horror show.
Charles A. Jaffe is senior columnist at MarketWatch. He can be reached at or at Box 70, Cohasset, MA 02025-0070.