Picking a great mutual fund can be a little tricky or overwhelming at first, but it does not have to be that way. Like a great person or friend, all good mutual funds have certain qualities or traits that should always be present. There are many characteristics or traits that I look for in a great mutual fund. I always try and make sure that these attributes are present before I invest.
You should look for mutual funds that are…
- Outstanding long term return for the past 5, 10, and 20 years
- Have low expenses
- Have low turn over rate
- A specific and published investment strategy
- Have no sales loads (front or back end)
- Not too large a mutual fund
- Take into consideration tax consequences
- Well established (now is not the time to take chances on a new fund)
- Run by a great group of managers or principle manager that has been at the top of the fund for a long time
- Exhibiting high ethical standards
A couple of bonus characteristics to look for….
- A member of Money Magazine’s Top 70 or Kiplinger’s Top 25 Mutual Funds
- A history of sticking to its investing strategy and not drifting
- A fund that matches your risk tolerance
- A fund that matches your diversification
This post was originally inspired by my very first guest post on Cash Money Life, one of my absolute favorite money blogs. I also updated some of these attributes in a post on selecting the best mutual funds.
Related posts:
- Top Eight Characteristics of a Great Mutual Fund – Revisited For a Turbulent Stock Market and Economy
- Investing 101 – Understanding The Different Mutual Fund Classifications
- How To Find The Perfect Mutual Fund And Where To Begin
{ 2 comments… read them below or add one }
You are spot on with these 10…good job!
I agree with almost all of your points except in a 401K or IRA I could care less about turnover. If you are going to own a high turnover fund it should be in a tax Privileged account.