I’ve made my list and checked it twice, and because picking on the naughty is always so nice, here is the second installment of the 2006 Lump of Coal Awards.
This is my 11th year giving out Lumps of Coal to managers, executives, firms, watchdogs and others who deserve nothing more than a chunk of carbon in their Christmas stocking this year. They earned that distinction in 2006 as a result of action, attitude or performance that is offensive, disingenuous, duplicitous, reprehensible or just plain stupid.
The remaining 2006 Lump of Coal Awards go to:
Late in the summer, ProFunds Group filed registration papers on 66 new exchange-traded funds, all of them leveraged, hard-to-use and completely unnecessary for any typical investor.
ProFunds was hardly alone in creating esoteric, semi-active, head- scratching or goofy new products. Rydex, PowerShares and Claymore, among others, all were in the same boat – but no other firm did more to solidify the wrong public image of ETFs, the one that says they’re meant only for traders and pros.
But Bogle has made it no secret that he dislikes ETFs, speaking out against them seemingly at every opportunity. He has called them a “pretty shotgun – great for hunting but equally perfect for suicide.”
A message of “traditional funds good, ETFs bad” is wrong because there are dumb, poorly constructed index funds. With ETFs gaining steam, Bogle needs to stop fighting progress and focus instead on helping consumers identify the investments – whether fund or ETF – that best let them follow the investment strategy he has championed for decades.
Kinney’s father, Charles Steadman, was widely considered the worst fund manager ever when he died in 1997. Over the 30 years leading to the time of his death, Steadman’s worst mutual fund lost 90 percent of its value; during that three-decade period, the Standard & Poor’s 500 was up more than 1,500 percent.
Kinney and her husband, Jerome, have been listed as managers of Ameritor Investment since April 2000, and while they purportedly left the stock picking to a consultant, she gets the heat because she could have closed the miserable Ameritor (nee Steadman) funds years ago.
Instead, she has done more in six years than her father accomplished in three decades; if you had $10,000 invested in Ameritor Investment fund at the start of 2000, you’ve got 48 bucks left today. That’s a 99.5 percent loss, including a decline of more than 85 percent in 2006 alone; with shares now trading at a penny, assets down well below $100,000 and an expense ratio that is virtually impossible to calculate – but that might reach triple digits if you could – Ameritor appears set to become the first fund in history to ride bad management all the way to zero.
Chuck Jaffe is senior columnist for MarketWatch. He can be reached at jaffe@marketwatch.com or Box 70, Cohasset, MA 02025-0070.
