investing

How to evaluate a mutual fund portfolio

 

 

It's great to hear about an investment that is outperforming others; it really makes your ears perk up. Be careful about chasing performance in the world of mutual funds, though. Here are several factors you should consider when evaluating which funds should go into your portfolio.

Let's start at the top. There are two flavors of funds to choose from: index funds and actively managed funds. Index funds are designed to track the market index. What's a market index, you ask? A market index is a section of the stock market.  

Think of index funds as a way to be on investment autopilot. They are not run by an active portfolio manager, so the expenses are lower. The less you pay out, the more you keep.

Actively managed funds have a portfolio manager who is calling the shots. The expenses are higher, and guess what? These funds tend to underperform their target indexes over time. Stay with me here; chances are, you are not going to get what you pay for because higher expenses translate into an overall lower return.

Insider Tip:

Because stock markets are inherently unpredictable, even seasoned fund managers have a hard time picking the right thing. Eighty-five percent of active mutual funds underperform their target goal.

advertisement

          Connect with us
advertisement
CD & INVESTING NEWSLETTER

Learn the latest trends that will help grow your portfolio, plus tips on investing strategies. Delivered weekly.

CDs and Investment

Need to invest $3K for the long term?

Dear Dr. Don, What's the best place to invest $3,000 for the long term? I'm interested in earning the best rates with low or no fees. Thanks, -- Cheryl Compounds Dear Cheryl, You've got (at least) three questions to... Read more

advertisement

Blog

Sheyna Steiner

6 stunning facts about Apple’s earnings

The world's biggest company, Apple, released earnings for the first quarter of fiscal year 2015. The results were stunning.  ... Read more

Partner Center
advertisement

Connect with us