Heike Moeller February 24, 2020 Mutual Fund
Mutual funds investors are always confronted with the decision about investing in managed funds or using an index fund. There are plenty of people who believe one is better than the other, so we will review the advantages and disadvantages of each and I will provide my own suggestion to help you out.
Mutual Fund returns are meeting the reasonable expectations of investors. In the greatest of bull markets, funds of all sizes seriously under performed the stock market. The inability of 85% of all fund managers even to match the performance of the market overall is the result of high fees (see above) short-term investment horizons and substantial transactions and tax costs.
Always review the experience and performance of the fund`s managers. When you buy a mutual fund, you are actually investing in the experience, skill, and savvy that the manager brings to the table. When the manager leaves, the fund performance generally goes with him. How many years has the manager been leading the fund? The longer (if generating strong results), the better. And keep an eye out for the gurus. The industry`s better managers are well-respected, high-regarded, and often quoted in the press. You will find multiple articles and even manager profiles published in the popular financial magazines and newspapers.
SEC Chairman Arthur levitt, Jr. warned of growing unfairness in the relationship between individual investors and mutual funds in January 2001. Mr. Levitt made the following comment: "THERE ARE A NUMBER OF INSTANCES THAT, QUITE FRANKLY, DO NOT HONOR AN INVESTOR`S RIGHTS. INSTANCES WHERE...HIDDEN COSTS HURT AN INVESTORS BOTTOM LINE, WHERE SPIN AND HYPE MAKSE THE TRUE PERFORMANCE OF A MUTUAL FUND, AND WHRE ACCOUNTING TRICKS AND SLEIGHT OF HAND DRESS UP A FUND`S FINANCIAL RESULTS"
When you are setting up an account over the internet with your online broker, you must first meet three important requirements. Your computer must be able to connect to the internet, your web browser must be at least 128-bit compatible such as Netscape 3.0 or Internet Explorer 3.0 or higher, and you must have at least a small amount of money if not more to start. Some online brokers require that you have as much as $1,000 or the equivalent in securities to open an account.
In developing mutual fund strategies it is important to recognize that most software programs, especially chart based programs, are designed to work best with stocks or ETFs. The holding requirements, short-term trading fees and round-trip penalties of most mutual funds companies require different software programs.