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Likewise, if you’re investing for retirement 30 year from now, a money market fund most likely won’t give you enough in the return department.
Another piece to that performance is manager tenure – considering that most mutual funds are actively managed. If a mutual fund has great long term returns, but the current manager has only been at the helm or affiliated with that fund for a short period of time, odds are that he or she isn’t responsible for those gains.
Another huge factor to look for during the screening process is fees and costs.
Shorter measurements—six months, one and three years, for example—don’t really give enough of the total picture.
It’s important to note that past performance is no guarantee of future returns, but it can be a good indicator.
Thanks to the Investment Company Act of 1940, all mutual funds are required to put out reports on their holdings, financial conditions, objectives, investment strategies, risks and other information.
Before you pull the trigger and buy any mutual fund, you should read through these documents.These costs can also majorly sap returns – especially in low returning assets classes like bonds.Finding a no-load fund in a particular category is preferred, although it can be worth paying the load for a fund that has continued great long term performance.Research is obviously a must-do for mutual fund investors, but how exactly do you start your search? Read on to find out how to research and find the mutual funds that are right for your portfolio and investing objectives.Be sure to read the 7 Questions to Ask When Buying a Mutual Fund Before you can even begin to start your research, you really need to define your investment objective.Once you get more familiar with just exactly what you are looking for, screening software allows you set toggles for things like expenses returns and expenses.It’ll kick out whatever funds do not meet your criteria and can make searching for the right fund even faster.Reading through these documents will give some idea on just what is happening with your investment.You can then decide if the fund is meeting your goals and objectives.Nothing saps performance more than fees in the long run.Morningstar’s screener will show whether a fund’s expense ratio is above or below average for its category.