Mutual fund investing---board member thoughts

[bec1nj]

In addition to being a converted fan of Mr. Market, as some of you may know I also track and follow mutual funds. In fact, I have been in the process of setting up a website devoted to that pursuit, and was wondering what questions you all think are important in the selection of a mutual fund. Any thoughts on what questions you would ask in choosing a fund for yourself and/or what questions you feel would be smart to ask the average investor would be appreciated. (By the way, perhaps a Mr. Market Fund is in order with the ticker symbol HUGEX!). Thanks for your time.

[billyjoe]

bec1nj,
I notice many funds are recommended based on the previous year's return. Many of these funds upon further research may show a nice 5 or 10 year average return ,but often will have a terrible year in the mix, often a down year of over 10%. Don't you think the track record of the fund manager may be a better way to pick a mutual fund rather than the fund itself. I guess what I'm saying is pick a manager rather than a fund.
billyjoe

[bec1nj]

Yep

Great insight billyjoe (as usual) as I knew people here would come up with good ideas.

[sowersnc]

I think another useful tidbit people would like to know about would be admin fees, front load and back load fees. Then show some examples of how they are applied. It may be nice to see this in contrast to some of the lower cost index funds.

Can't wait to see the site.

[grebnet]

Window Dressing ???

There seems to be this game of window dressing, to make Mutual Fund portfolios look strong by buying into strong stocks after they have made a strong run. Is there a mechanism to track this?

[New-born baby]

Say it ain't so, Joe.

Bruce,

Isn't this the truth: the market outperforms 98% of all mutual funds in the long run? I have the stats to back it up, but am too lazy tonight to dig it out for you. But if you'd just agree with me, I won't have to produce the proof.

[MickyMouse]

Bruce,

Isn't this the truth: the market outperforms 98% of all mutual funds in the long run? I have the stats to back it up, but am too lazy tonight to dig it out for you. But if you'd just agree with me, I won't have to produce the proof.

"Random work down WS" has all the stats. That's why it boasts INDEX fund. Just to be average to beat at least 90% of all funds. Think you can find the other 10%? try hard.

Micky
________
buy vaporgenie

[bec1nj]

Hope

I only hope if I get the site up and running that the people will be as smart as you all are here. On the index thing, it varies from survey to survey but the trick is to wade through them all to find the gems that beat the index benchmark. One interesting sidelight that no one really talks about who run funds, is the relevance of the benchmark and whether they pick a real comparison one (I mean, who says the S&P is the default to judge for some funds). Guess an equivalent to finding the right fund vs. indexing is in stock picking, where you could buy an ETF of the total market vs. using the HUGE picks, where Mr. Market's beat it--- but you have to be smart enough to find Mr. Market.

Yeh, that fees thing can be a joke, and you bet I will address that. Also, you are right about what is called "window dressing" as what some managers do is buy a top stock the last day before they have to disclose their holdings so it looks like they had it the whole time. To use a financial/stock term, this practice "sucks".

I just always had a lot of interest/fun in following them, as it is sort of like Strat-O-Matic baseball to me, with managers of funds like managers of the baseball teams and your keeping close tabs on the whole situation (of course a big difference is real money is involved in this!).

Keep those suggestions coming as they are great. Thanks for taking the time to share your thoughts.

Bruce

[Karel]

I like this link:

http://moneycentral.msn.com/content/Stratlabs/Round8/P37150.asp

She's doing what I tried to do when I started investing, but my universe was too small (and it was 2000). She leads an investment management firm and they also run three funds for the less affluent (see Biography link). There is even a screen to roll your own fund upgrader portfolio!

Regards,

Karel

[billyjoe]

Here's a good one I never thought of for those wanting to be diversified.
Suzie Orman says "check the top 10 individual stocks held in any fund you consider to buy" you might be surprised to find many of the same stocks owned by several different funds which would leave you non-diversified.
billyjoe

[bec1nj]

Karel; Duplicate of funds

Thanks for checking in, Karel, and I hope you are doing OK per my private message to you awhile back. BillyJoe-Absolutely true, as the thing is some people just pick the top funds in a vacuum from a top performers list, when really all they are doing is buying the same stocks in different funds.