Related articles:

Chuck Jaffe: Time for Lump of Coal AwardsChuck Jaffe: After a year like this, fund honchos owe us Christmas cheer

Other articles by Chuck Jaffe:

Your Funds: A return of 6 percent is decent, but what about that '08 dive?Your Funds: Obama overhaul plan for financial system skips some fund fixesYour Funds: Actively managed ETFs are in vogue, but beware the hypeYour Funds: GM's bankruptcy has fund managers dumping its shares Your Funds : Vanguard Group founder still says don't throw caution to the wind Your Funds: Brace yourself for apologists' market justificationsYour Funds: Investors undeterred by beating they've taken with 401(k)sYour Funds: Unloved ETFs landing on the chopping block Your Funds : With fees on the rise, it's time to recheck fund's expense ratio Your Funds: Don't forget to monitor investments

Trades/Construction
RANCHO RESORT
MAINTANANCE POSITION Finance and Accounting
Charles E. Gillman Company
Accounting Specialist Administrative & Professional
Tucson Urban League
CEO/President Administrative & Professional
Jorgensen Brooks Group
Counselor Mechanical
Komatsu Equipment Co
Resident Field Mechanic Sales and Marketing
Everready Glass
Sales Reps

It's been a terrible year for the stock market but a banner 12 months for misbehavior, misguided thinking and outrageous maneuvering in the fund business. That's why there's plenty of material for the 2008 Lump of Coal Awards, presented to the mutual fund industry's bad little children, the ones who deserve nothing more than a bituminous bauble in their Christmas stockings this year.

Last week, this column dropped coal on some of 2008's miscreants. Now it's time for the rest. Bad results alone are not enough to earn the prize here: Lump of Coal Awards recognize managers, executives, firms, watchdogs and others for action, attitude, behavior or performance that is bumbling, offensive, disingenuous, reprehensible or just plain stupid.

And the losers are:

Ardent supporters of exchange-traded funds: Most irrational exuberance.

With ordinary funds suffering, many people touted the benefits of exchange-traded funds as an inherently better way to go, as if the ETF structure automatically made a pooled investment good. ETF assets ballooned as a result of this kind of thinking, peaking in mid-September, just in time for the market's big decline.

Don't get me wrong; I love the ETF structure. But ETFs are not immune to the problems plaguing traditional funds, particularly when it comes to performance. For proof, consider this: Since the first ETF was launched in 1989, according to Morningstar, the ETF industry collectively has produced a net loss for investors. In other words, lump all ETF investors together and, on the whole, the only ones to profit from the evolution of the exchange-traded fund would be the firms creating the ETFs in the first place.

Promoters of exchange-traded notes: False promises.

Introduced in 2006, exchange-traded notes are unsecured debt securities where the investor's return depends on the performance of an ETF. That said, an ETN buyer actually assumes the credit risk associated with the financial-services company issuing the note.

Backers of these products told investors that there was no reason to worry about the credit- worthiness of the big financial-services firms.

Hardly, and buyers have the massive losses this year to prove it.

The fund industry itself: Missing a chance to raise confidence.

In spite of miserable performances across the board, you can find plenty of fund-industry bigwigs patting themselves on the back and saying: "It could have been worse. Just look at the performance of hedge funds."

Typical fund investors — who aren't part of the hedge-fund crowd — don't see it that way. They're looking at the fund world and thinking this is a rigged game. The fund industry should have taken steps — like fee waivers, additional client contact and hand-holding, and more — to stand out as the right way for Main Street to access Wall Street. Instead, in the middle of the current market crisis, the fund biz showed its true colors and wound up looking just as greedy and self-serving as the rest of the financial world.

Fidelity Investments: Worst actor among big fund companies.

Investors in actively managed funds want their managers to outperform the benchmark when the going is good, and to lose less than the average in the peer group when the market is in the tank.

In 2008, however, Fidelity stuck too long with a global growth strategy, and shareholders got slaughtered. Two-thirds of Fidelity's 180 actively managed domestic equity funds currently rank below their average category peer for the year; more than half of Fido's international funds are in the same boat. Fido has 42 different managers working on growth and growth-and-income funds, and 37 are lagging the S&P 500 this year.

The Securities and Exchange Commission: Fiddling while the fund industry burned.

The SEC promised significant fund reforms for 2008, but it didn't accomplish anything. The regulatory agency talked tough about eliminating 12(b)-1 fees but never came close; the proposed independent-chairman rule is dead; and investors who are mistrustful of the fund business won't find anything on the SEC docket that will make them feel better about the future.

Couple that with regulatory bungling on any number of high-profile, big-name cases plaguing Wall Street, and it's hard not to believe that the agency has forgotten how to protect the small investor.