What should I do with tumbling mutual funds?

The first thing you want to find out is whether it is just your funds that are under-performing, or is it all the funds like them. Wall Street has a herd mentality, which means that at some point growth funds will fall out of a favor. At another point, no one will want value, or large cap, or international.

So the first thing you want to know is how your funds are doing compared with their peers.

Check the investment section of the Wall Street Journal or do a Web search to find out how competitors are doing.

If all the funds of this type are falling, then at least you know it is not your funds that have suddenly become dogs.

However, you still have a decision to make: Do you want to wait until these funds come back into favor, or switch to something else? If you decide to wait it out, that’s fine. If you decide to move to a different type of funds, at least you know what to stay away from.

But let's say this particular type of fund is doing OK, and it is only yours that isn't. Then what do you do? A couple of things. First, determine whether the under-performance is a relatively recent event. If so, look for reasons. Is there a new fund manager? Has the fund taken a new approach--such as placing larger bets? If there have been major changes, and you don't like them—or the results—you may very well want to change. However, if the fund's basic strategy remains intact, you may want to wait a couple of quarters before making a change.

Stars don't usually lose their luster overnight.