American businesses and workers weren't the only ones to get thrown for a loop in the last recession. Actively managed mutual funds have also seen some pretty high casualties as disillusioned investors have sought out cheaper market-tracking funds. After all, why pay more for funds that are statistically likely to lag the market? And apparently, investors' disenchantment may even be extending to funds that have beaten the market in recent years.

Losing ground
It's hard to argue that active funds are on a winning streak. According to Morningstar data, actively managed stock funds saw net outflows of $323 billion in the past four years. During that same time, equity index funds garnered $108 billion in net inflows. But as a recent Associated Press column pointed out, lagging mutual funds weren't the only ones feeling the wrath of scorned investors.

The column highlighted three funds that outperformed the S&P 500's -0.8% annualized loss in the four-year period from 2007-2010 but still experienced significant loss of assets.


Annualized Return From 2007-2010

Fund's Net Asset Outflow From 2007-2010

Fidelity Blue Chip Growth (FBGRX) 4.5% $9 billion
Putnam Voyager (PVOYX) 7.0% $6 billion
Calamos Growth (CVGRX) 2.9% $8 billion

So how is it these funds are losing assets even as they outperform the market? First of all, keep in mind that many decent funds lost ground to investor fear and panic during the bear market. In such situations, investors tend to withdraw their money first and ask questions later.

Secondly, all three of these funds are large-cap growth options, an area of the market that has been distinctly out of favor in recent years. Odds are good that investors were doing a bit of performance chasing and redirecting their money into hotter-performing small-cap or commodity-related funds. But a four-year performance number isn't the sum total of a fund's worth. In this case, it may help to take a closer look to see what's going on at these three funds.

Under the microscope
At first glance, Fidelity Blue Chip Growth looks like a good deal -- the fund ranks in the top 12% of its peer group over the most recent five-year period thanks to strong performance from hot tech names like Apple (Nasdaq: AAPL) and Google (Nasdaq: GOOG), which have crushed the S&P 500 in recent years. However, the fund underwent a management change in July 2009, which means the fund's prior track record isn't particularly relevant. And while the fund has performed quite well since that time, it's a bit too soon to draw conclusions about the new manager's talent, given that he's been investing in a strong bull market with the wind at his back. This fund may provide a decent ride for investors, but it's a bit too soon to invest with any degree of confidence here.

Over at Putnam Voyager, management has also shifted around a bit, with a new skipper coming on board in November 2008. Again, fund performance has been very good since then, with the fund posting a 32.7% annualized gain through the end of March 2011 compared with 16.5% for the S&P 500. The fund has also seen some strategy shifts in recent years as its management team has undergone several changes. So far, it looks like the newest manager may be on a winning streak, but again, it's too soon to know for sure. The fact that the fund posted a 64% gain in 2009 is to his credit, but fundholders shouldn't expect that kind of outsized performance every year, especially as the bull market matures. This is another fund that should be on investors' wait-and-see list.

Fortunately, Calamos Growth doesn't have to worry about big management changes. The team here is led by John and Nick Calamos, who have been with the fund since its 1990 inception. Here, management combines top-down macroeconomic forecasts with bottom-up stock research to form a growth-oriented portfolio. Technology names account for a hefty 41% of fund assets and include more richly valued Internet stocks such as (Nasdaq: AMZN) and (Nasdaq: PCLN). The process is consistent here, but volatility is high -- with the fund losing half its value in 2008 before rebounding 52% the following year. Sector concentrations add another degree of risk here. No doubt this volatility has led many investors to get into and out of the fund at exactly the wrong times. This fund has a lot going for it, but it does come with a front-end load, so if you can't avoid paying this fee, I'd recommend looking elsewhere.

Another option
While each of these three funds has at least a few points in its favor, I think there are better large-cap growth fund options out there. One such fund is PRIMECAP Odyssey Growth (POGRX). The long-tenured PRIMECAP team is one of the best in the business, and it boasts a stellar track record. Although this fund has only existed since late 2004, in that time it has posted a 7.8% annualized return, versus 4.1% for the S&P 500.

The process behind the fund goes back much further. Here, management looks for temporarily cheap stocks with significant future growth prospects. While health-care names such as biotech firms Amgen (Nasdaq: AMGN) and Immunogen (Nasdaq: IMGN) make up a big chunk of assets, risk is still carefully managed here, with the fund's beta clocking in right at the market average. Turnover is a miniscule 5% a year, and expenses are some of the lowest in the large-growth fund category at just 0.68% . PRIMECAP Odyssey Growth is a true winner for growth-minded investors.

Remember that short-term performance is never the whole story behind a fund's relative worth. It's important to dig deeper into the numbers and investment approach at any fund to get a true idea of what it has done and what it is likely to do in the future. That's the key to finding the truly great funds that you'll want to hold on to, no matter what the market does in the meantime.

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