Evaluating new fund options in a 401(k) plan

Retirement » Evaluating New Fund Options In A 401(k) Plan

Investigate long-term performance
Investigate long-term performance © NAN728/

While fund performance is an important variable in the investment decision, too many investors focus on recent performance when selecting mutual funds. Short-term numbers -- one month, six months or even a year -- don't give you much insight about the quality of a fund.

Longer-term returns -- those from three, five or even 10 years -- tell the story of how a fund manager has managed a fund in a variety of market environments, says Nauta. It can be easy for a manager to perform well when everything's going well with the market and the economy, but when things aren't so good, how does the fund perform relative to its benchmark?

Franklin suggests comparing funds to other funds in the same peer group -- for example, a large-cap fund with others in the same category -- which will give you a sense of how the fund has performed relative to similar funds.

Maximize your 401(k), and retire in style No matter where you are in your career, be sure to make the most of your workplace retirement plan.


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