Charting Mutual Fund Performance Vs. S&P 500 (4 year period)

What have mutual funds done for investors during the past 4 years? Not much. I found some well known value funds that significantly underperformed the S&P. I googled "mutual funds" and found this recent blog post: Eighth Annual Mutual Fund Turkey Awards by Maxfunds.com which gave me some interesting ideas.

Some of the value funds the blog mentioned were down 50%+ ytd. Hopefully they have a nice dividend to reinvest so people can average down for the next bull run. For the people that hoarded cash in late 2007; once the recession/credit crisis fades out (could take a while) these funds will be great buying opportunities for the long haul, but so will the SPY (S&P 500) exchange traded fund. By the way I'm not making any recommendations here.

So I screened for large reputable value funds with more than $3 billion under management and charted them against the S&P 500 since 12/3/2004 (4 year spread). I think it's fair because it gives a 3:1 bull/bear time period. It turns out many of the funds underperformed the S&P by 15%+. I should note that the Dodge Cox and Third Avenue fund did significantly outperform the S&P during 2005 and 2006. Below I provided the mutual fund, symbol and chart vs. S&P. Also check out this article: What went wrong with value funds (Money Magazine).

Legg Mason Value Trust: LMVTX
Dodge Cox Stock Fund: DODGX
Third Avenue Value Fund: TAVFX
Vanguard Windsor: VWNDX
Fidelity Equity-Income: FEQIX


S&P vs. Value Funds Over 4 Years (Source: Bigcharts.com)

Click to enlarge