Lux Investing

What do I look for when "doing my research" for mutual fund investing?

You always here people say that, but honestly I don't know what I should be looking at besides some website's star rating. How do I really know if a fund is decent. What do you think of these? OPGSX and SGDAX

Public Comments

1. Before you pick a mutual fund, you have some sort of strategy in mind with respect to asset allocation. How much of your investment portfolio do you want in stocks, bonds, domestic, international, etc. Then research the stock to see what its allocation in. Then you'll want to look at the fund's management, does it have a long history of good performance, is it rated highly by firms like Morningstar? Good history doesn't guarantee future results but a good long history beats a short good history or a short bad history, right? Finally, look at its fees and expense ratio. That's how much the funds will cost you, all things being equal I'd take a fund that's cheaper. Good luck!
2. Look for what type of "load" or commission the fund charges for buying the shares, also look at the annual fees. The lower the costs, the better for you. Next, you'll want to go to MorningStar.com and check the track record of fund. See if it's a high-risk fund or not and how well they've done over the years - the longer the track record, the better. Good luck! Best, John http://www.tickerhound.com "Where Investors Help Investors"
3. Management, past performance, portfolio, load charges, expense ratio. Morningstar.com is a good resource. Before you look at specific funds, you need to decide what type of fund you want - equity/fixed income, domestic/foreign/global, asset allocation, risk, sector/geographic specific, etc. Also read the prospectus and annual report.
4. A fund's expenses subtract from your profits and add to your losses. The Vanguard family of funds has historically had some of the lowest expense ratios. Look at www.vanguard.com for descriptions of the funds and some educational information. If you don't have a specific idea then put your money in S&P index Fund. You can switch to any other fund in Vanguard's family later with a phone call. If you don't like Vanguard, look for other no-load funds that you can buy direct from the sponsor and compare the expense ratios. Don't buy through a broker. The load and 12b-1 charges go straight into the broker's pocket and don't help your investment.