Why Pay Extra For Underperformance?

Always Question the Recommendation

Do you own due diligence

Why would a major financial journal tout a mutual fund with a 5.75% front-end load and a 1.85% annual expense ratio? You would probably expect it to to be a star performer to be worth those hefty charges.

Barron’s presented the Neuberger Berman Long / Short Fund (Class A), symbol NLSAX, this week with the following headline.

Columnist Sarah Max explained how the fund’s manager captures gains while supposedly cushioning declines by devoting a portion of the assets to short sales and hedges.

Perhaps she should have checked out the fund’s stats in more detail before endorsing this one.

Was Lipper kidding around?

Lipper’s ratings on NLSAX are ‘above average’ in 4 out of 5 of their designated categories. Was the fund heavily penalized for that high expense ratio and front-end load? Lipper merely lowered NLSAX's ranking to ‘average’ in the ‘expenses’ category. I wonder what costs NLSAX would need to impose to score worse.

Continue reading at: Gurufocus.

 

Disclosure: No position in NLSAX

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