1. Management Stability: If you find a great manager, hang on to them. Top managers usually continue to perform better in up and down markets, because they have the stability and experience to stay focused on their objective. Let them work for you and enjoy the stability.
2. Management Participation: The management team of a great mutual fund usually invests heavily in their own fund. If it is good enough for their money, you can expect that they have a vested interest in taking care of yours.
3. No Load Structure: High commissions can have a detrimental effect on even a good mutual fund. Most great funds offer a no-load option or a load-waived option that is available through financial advisers. These are the ones that you want to invest in because every dollar goes right to work for you… not a broker.
4. Lower Expense Ratio: Keeping fund expenses low is a goal for all funds, but most great funds are better at it than poorly managed funds. Top quality funds experience lower costs for many reasons and this strongly helps keep them on top.
5. Consistent Returns: When looking at the funds annual returns over the years, focus on funds that are consistent and consistently beat their peer group. One year of out performance can be luck, but regularly being in the top ten percent takes skill and hard work. These are the gems that you want handling your money.
6. Very Specific Strategy: Every fund has an investment strategy. Some are very vague and others pinpoint their objectives and follow their plan with laser-like focus. These great fund usually execute their investment plan better than those that are making it up as they go.
7. Long-Term Track Record: Having a strong long-term track record of quality results with lower risk is another great benefit to investing in great mutual funds. It shows that they have been able to maneuver both good markets and bad economies with better than average results. New funds can be great, but I prefer a fund that has been doing it well for a long time.
Summary: If you use these factors before making any investments, you can rest assured that you have done a thorough job of finding the “best of the best” choices for your hard-earned dollars. The good news is that there are plenty of great choices out there for each investment strategy available. The bad news is that it takes some time, knowledge and effort to find them.
Article Source: Keith Maderer