Every major fund management company wants you to believe that all of its funds are worthy of a place in your portfolio. But even the best fund families aren't perfect -- and so you shouldn't necessarily rely on a single fund family for all your investment needs.

When funds fall short
Recently, our Motley Fool Champion Funds newsletter service has run a number of special reports highlighting several of the major fund families, including Fidelity, American Funds, and Vanguard. In each, Foolish fund expert Amanda Kish pores through the dozens of funds that each family offers to find the cream of the crop for mutual fund investors.

But inevitably, mutual fund companies have to deal with at least a few funds that don't stand up to the competition as well as the other offerings in their fund families. Whether it's lackluster performance, a dearth of investing expertise among a fund's management, or excessive fees that holds a particular fund back from its fund siblings, even those who feel strongly about exclusively using a single fund family might nonetheless want to consider alternative funds to avoid the chance of making a mistake.

Here are a few of the funds that the special reports uncovered as not keeping up with the rest of their respective fund families:

Fund

5-Year Annual Fund Return

Beats (Trails) Benchmark By

Holdings Include ...

Vanguard Growth Equity (VGEQX)

(3.57%)

(0.03%)

Wal-Mart (NYSE:WMT), Cisco Systems (NASDAQ:CSCO), PepsiCo (NYSE:PEP)

Bond Fund of America (ABNDX)

2.11%

(2.93%)

Treasury, agency, and corporate bonds issued by companies such as AT&T (NYSE:T) and PotashCorp (NYSE:POT)

Fidelity Advisor Dividend Growth A (FADAX)

(3.90%)

(3.65%)

Wells Fargo (NYSE:WFC), JPMorgan Chase (NYSE:JPM)

Source: Morningstar.

Let's take a closer look at why Amanda believes these funds merit caution.

Paying for more than you get
Vanguard is well known for pioneering index funds, and index investing remains a vital part of Vanguard's business strategy. However, the fund family also has a number of actively managed funds that seek to outperform their benchmarks, rather than simply match them.

However, when a fund fails to beat its benchmark and instead tends to see its returns align closely to broad market averages, investors have to ask themselves whether the returns warrant the higher expenses associated with actively managed funds. Vanguard's Growth Equity fund is an example of this phenomenon; despite a relatively high (for Vanguard) expense ratio of 0.72%, the fund has fallen in the bottom 20% of its fund category over long periods of time. If you're paying more and not getting better performance, you may be better off sticking with one of Vanguard's index funds.

A similar pattern exists with some special classes of funds. For instance, the Fidelity Advisor fund mentioned above looks pretty similar to another fund that Fidelity offers, the Fidelity Dividend Growth Fund (FDGFX). Yet while the Advisor fund charges a front-end sales load and has annual expenses over 1%, Fidelity's direct offering sports a lower 0.63% expense ratio and has exactly the same manager. There's no need to pay more when you can obtain better, cheaper funds directly from a fund provider.

Making a bad move
On the other hand, some funds just make bad moves. The Bond Fund of America blundered last year by being overweight in bonds issued by financial companies, which contributed to an abysmal 12% loss in 2008 when most broad-market bond funds posted gains.

You might be tempted to let a one-time lapse go if overall performance has generally been good apart from that. However, with the number of mutual funds available to investors, there's little reason to put your money at risk if you lack complete confidence in a given fund.

Fund families can be convenient for investors looking for one-stop shopping, and for the most part, these three fund families offer a broad range of high-quality funds. But don't feel compelled to stick with a below-average fund just because it's offered by the same fund family. Make the most of all of your investments, and you'll maximize your returns.

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Fool contributor Dan Caplinger has plenty of funds from different fund families. He doesn't own shares of the companies mentioned. Wal-Mart is a Motley Fool Inside Value pick. PepsiCo is a Motley Fool Income Investor recommendation. Try any of our Foolish newsletter services today, free for 30 days. The Fool's disclosure policy tells you everything, good or bad.