Chuck Jaffe of Marketwatch looks at an interesting question: "When should I sell a mutual fund holding?"
He notes that the primary reason most people sell funds for is poor performance. But that’s often not a good reason to dump a fund. A fund may be the best performer in a sector that’s temporarily out of favor. (Imagine selling a REIT fund in 2000 becuase it under performed the broad market?)
Jaffe observes — "Knowing why you should sell a fund is every bit as important as knowing what to buy. If you are wondering whether your funds are worth hanging onto, consider the following:"
— How has the fund done compared to its peers?
— Has the fund changed strategies or missions?
— Has management changed?
— Have you reached your goals, or will you soon?
— Would you buy the fund again today?
That’s good advice for mutual fund investors.
How to know when to sell Mutual Funds
MarketWatch, 12:02 AM ET Aug. 21, 2005