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Updated by fin.tips on Oct 27, 2016
Headline for 5 Important Traits of Good Mutual Fund Shares
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5 Important Traits of Good Mutual Fund Shares

A varied collection of profitable mutual funds can prove to be an excellent means of amassing wealth for an investor. Luckily, selecting the right funds isn’t all that difficult as all well-performing funds can be seen sharing particular characteristics.

Source: http://fin.tips/profitable-mutual-fund-shares/

1

Low charges, fees, and expenses

Low charges, fees, and expenses

Mutual funds that boast lower expense ratios will generally be more attractive, and investors need to consider the fact that low expense ratios do not indicate low performance.

The opposite is often true, with the best performing funds in a particular category offering expense ratios below category average.

2

Consistently well-performing funds

Consistently well-performing funds

Investors should assess the fund’s long-term performance and profitability and not make rash decisions because a fund performed really well in the past year.

The most profitable funds aren’t those that generate the highest returns a particular year, but those that produce considerably good returns year after year over a long period of time.

The longer the fund has been in operation, the easier it is for potential investors to assess its profitability and examine the efficiency of its management during a downward market cycle.

3

Strong investment strategy

Strong investment strategy

The fund that is controlled by a solid investment strategy will most likely perform remarkably. Potential investors should, therefore, look into the investment objectives of the fund and the manager’s proposed strategy to achieve those objectives.

Investors should also be able to recognize and be cautious of the ‘portfolio drift’ phenomenon. This is when the fund manager steers off-course from the detailed strategy so much that the fund’s original goals change considerably.

4

Good reputation and trustworthiness

Good reputation and trustworthiness

The safest mutual funds to invest in are those established and offered by notable names in the business with a proven track record. Firms that have a transparent operational policy regarding their objectives, strategies, and fees and charges are the best ones to do business with.

5

High asset reserves, but less money

High asset reserves, but less money

The funds that are heavily invested in but do not boast a large quantity of assets will generally perform better. Funds that display good performance will draw more investors enabling them to acquire more investment assets.

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