First off I would like to say Welcome Back! I hope you all enjoyed the holiday weekend.
Today will be the final post for selecting a mutual fund. It has been a long topic. (But it has to be done) Enjoy! You will see below is the process I would take in order to select a Mutual Fund
First I would look for a fund that has a proven track record. I like to find a Mutual Fund that has been around through the ups and downs of the market. I always try to find A Fund with a record of 10+ yrs of investing experience. This will give you an opportunity to see how well the Fund performed during the bull (up) and bear (down) markets. I use yahoo finance to do my research. It’s easy to navigate to select a Mutual Fund. I will show step by step of an example of selecting a fund.
1. Start by going to (Yahoo Finance) http://finance.yahoo.com/
2. Next select the investing tab and scroll down to Mutual Funds
3. Now click on the Fund Screener on the left hand side
4. Once at the Fund Screener you can select your parameters
5. I have selected the following parameters as an example
-Overview U.S. Stock Funds
-Manager Tenure Longer than 10 years
-Performance Returns 1 yr-up 10%, 3 yr-up 10%, and 5 yr-up 10%
-Holdings- Net Assets of 1 Billion or more
6. After your parameters are set click find Funds.
- I selected Reynolds Blue Chip Growth by hitting profile because it was basically the only stock fund that wasn’t tied to all gold and precious metal investments. (Never invest in Sector Funds) Now you have a Fund you can dig into the details to how well the Fund has performed over the years.
-Now that you’re on the profile page you can view the management information to see who the current Fund Manager is at the helm and a brief breakdown of their history. I would look further by researching the manager on Google and finding the home page of the institution the manager is currently with to view their credentials.
-Next, I would look at the Fund summary to see if this is meets my investment goals. Keep an eye on the year to date return to see how well the fund has done in the past year.
-Lastly, pay attention to the fees, expenses, and turnover you will incur if you invest in a Fund. The lower the better I say, but sometimes you have to pay up for performance. The annual holdings turnaround tells you how often the stocks inside the fund are bought and sold. This one has high turnover which makes the expense ratio higher than the average fund in its category.
7. Performance is next on the list. Select the performance tab. If this is lacking there is no point to invest in that particular Fund. We want results! Look for Funds that have a return of 10% or higher as you need to build your portfolio for retirement. For those close to retirement you want to select a Fund that is stable in returns and pays a great dividend for income.
This fund ticker symbol RBCGX (Reynolds Blue Chip Growth) is top notch in its category and has outperformed the S&P 500 TR. 1yr return 44.07% 3yr 17.15% and 5yr 13.24%
If you scroll down you will see how well it did in the previous years vs. its peers in annual total return, past quarterly returns and rank in category (my favorite.) This fund was in the top 1% of all funds in its category.
8. Holdings- This will allow you to view the top 10 holdings of the Fund and the sectors it’s invested in. This is great place to study the individual companies that play a large part in driving your Fund higher in price. Have some fun and research those companies to learn why they may be a great investment. This may also lead to a great investment idea in individual stocks if you want to try your skill with 1 company (I would recommend investing in multiple individual stocks among different industries to diversify your money, but if you want to start off with a small amount of money with a company to see if you can handle the risk I say go for it. (I did and believe I learned a great from investing in 1 company. This gives you a chance to really learn about how a company makes their money.)
9. Risk- shows how a fund compares to its peers with alpha and beta. This breaks down the risk reward and how a fund moves up or down compared to the market as a whole. Click on Help with Risk Statics at the bottom of the screen for a perfect definition of alpha and beta.
Now that you have the tools to select a Mutual Fund you have to combine your goals and objectives to finding a Fund that is right for you. I hope this information was helpful. It may seem overwhelming and complicated, but practice makes perfect. If you have any questions please ask as I can explain in further detail if something seems confusing.
Thank You,
Clay-
Have a Question? Send Questions to wheatleycsmk@gmail.com
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