Mutual Fund Returns Analysis

You cannot open a newspaper or read a magazine without looking at advertisements promoting the "hot" mutual funds. Any investment does not guarantee the success from the past performance. You can choose the best performing mutual fund based on the factors such as:

    The types of services offered and fees
    The age and volume
    Return rate.

1. The types of services offered and fees:

Study the prospectus of the fund to learn what services it provides to shareholders. Some funds provide special services for potential shareholders like toll-free telephone numbers and automatic investment programs. You should find out how easily you can identify the best performing mutual fund. For example, company with different background can offer different rate of return.

2. Age and volume:

Before investing in a fund, read the brochure carefully to find out how long the fund has been operating and the asset size of the fund. Recently created or small funds sometimes have outstanding short-term performance records. However, as these funds grow larger and increase the number of stocks they own annually, each stock has less impact on the performance of the fund. This may make it more difficult for the company to sustain opening results. You can get a better image of the performance of the fund by looking at how the fund has performed over long term periods and when the ups and downs of the market. For example, it is easier to choose the best by looking at the history of the company.

3. Return rate:

The speed of the turnover of the fund calculates the frequency with which it buys and sells securities. A fund that quickly buys and sells securities may generate higher trading expenses and capital gains taxes. For example, the income is more therefore the expenses of the company are higher. Thus, the return rate is lower.