By Richard Loth (Contact | Biography)
Investment research firms use data provided by the fund sponsor to generate a variety of analytical perspectives. These are used by professional and non-professional investors in selecting and monitoring mutual funds. For funds that are publicly traded and the object of significant investor interest, this information is distilled into fund research reports. These are available to the investing community through a number of services such as Morningstar and Value Line.
The content of such a report is comprehensive, containing dozens of data points, ratios and informational perspectives that reveal the investment quality of a fund. To make things simple for the average investor, we'll take this abundance of information and focus on eight fundamental indicators of investment quality. An investor can use this perspective to make intelligent decisions on whether to buy, sell or hold a mutual fund.
These eight evaluative fund investment qualities are listed below. Subsequently, you will find in-depth discussions of each of these investment quality indicators, including where to find them, what they mean and how to use them). Armed with this know-how, you will be equipped to make informed mutual fund investment choices.
- Fund I-Q No.1: Investment Style Considerations
- Fund I-Q No.2: Risk-Return Profile
- Fund I-Q No.3: Fund Size and Style Compatibility
- Fund I-Q No.4: Manager Tenure and Structure
- Fund I-Q No.5: Portfolio Turnover Ratio
- Fund I-Q No.6: Fees and Expenses
- Fund I-Q No.7: Comparative Total Returns
- Fund I-Q No.8: Analytics
Fund Investment Quality Scorecard (FIQS)
A fund does not have to be perfect in all aspects to be top rated. For example, what we are looking for is a fund that has a composite investment quality score from above-average to high. Completing a scorecard will be relatively easy once you learn how the system works from the instruction provided herein. A little experience and some common sense will serve you well.
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InvestingCheck in here for an overview of mutual fund investment quality and how to find it.
InvestingLearn some background on mutual funds and what factors can be used to assess their investment quality.
Financial AdvisorMore than 80 million people, or half of the households in America, invest in mutual funds. No matter what type of investor you are, there is bound to be a mutual fund that fits your style.
Financial AdvisorLearn how mutual funds work, why they are so popular and how younger investors can get started by putting mutual funds in their IRAs or 401(k)s.
TradingHow much a fund charges for its services is the most important indicator of how well it will perform.