Open End Fund Issue

I stumbled across an article in the back of the current BusinessWeek about growth funds and the growth/value style question.

The article leads off with the actions and opinion of Harry Lange who manages the Fidelity Capital Appreciation Fund. The article says that Lange has the freedom to buy any kind of stock and lately he has moved "heavily into growth."

As I see it, this creates a problem for do-it-yourselfers and professionals that put clients into OEFs. If the goal is a diversified portfolio, there will be at some point in the process a decision made about how much growth and value to have. Then every so often changes to the balance might be made. If you have a fund that can own anything it wants you really have no way of knowing where it is now, or what the manager might be thinking about for the future.

This is not a knock on the fund, it might be great and Mr. Lange might do a fantastic job navigating the construction of the portfolio. But that doesn't change the fact that you may not know where the fund is right now or how to work it in to a portfolio.

So if you don't really know what type of fund this is or will be in six months, how do you know how much to buy to integrate into your portfolio? Unless I am missing something the only thing you are buying is the manager. There is no reliable effect here that adds to diversification.

Yet another reason why I think these are the wrong product for a lot of investors.