Fund I-Q No.7: Comparative Total Returns
A mutual fund's total return investment quality is evidenced by relatively consistent positive performance as compared to its peers, its category benchmark and an appropriate broad market index, over five- and 10-year periods, preferably the latter.
Historical comparative data is useful to investors as a reasonable basis, albeit not a guarantee, for forming expectations about future investment results. Using historical patterns is better than depending on guesswork about what's going to happen in the future.
Mutual fund investors would be wrong to completely disregard past fund performance as a predictor of future performance. At the same time, do not base a fund selection entirely on past results or be seduced by eye-popping, extraordinary gains, which may be temporary. There are a number of fund investment qualities to be considered in evaluating a mutual fund investment.
To help readers get a quantitative fix on mutual fund annualized total return numbers, below are the fund category averages as per Morningstar's FundInvestor year-end 2005 fund statistics for its universe of 500 of the most widely traded mutual funds:
|Fund Type||5-Year %||10-Year %|
|Large Cap Growth||-3.4||7.0|
|Large Cap Blend||0.5||8.1|
|Large Cap Value||4.0||8.9|
|Mid Cap Growth||0.0||8.5|
|Mid Cap Blend||8.1||11.7|
|Mid Cap Value||9.4||11.4|
|Small Cap Growth||2.2||8.2|
|Small Cap Blend||9.9||11.2|
|Small Cap Value||135||2.8|
Return to the Main Menu.
Scoring Fund Performance Data
Securities analysis that uses subjective judgment based on nonquantifiable ...
Alpha is used in finance to represent two things: 1. a measure ...
A financial statement that summarizes the revenues, costs and ...
The degree to which an asset or security can be quickly bought ...
Equity is the value of an asset less the value of all liabilities ...
Profit margin is part of a category of profitability ratios calculated ...
For investors, arithmetic and geometric means can be important – and potentially controversial – measures of past investment ... Read Full Answer >>
Working capital is a commonly used metric, not only for a company’s liquidity but also for its operational efficiency and ... Read Full Answer >>
There are some types of mutual funds, called stock funds or equity funds, which hold only stocks. However, there are a number ... Read Full Answer >>
The magic of compound interest can be summed up as the concept of interest making interest. On the other hand, simple interest ... Read Full Answer >>
The income statement, also known as the profit and loss (P&L) statement, is the financial statement that depicts the ... Read Full Answer >>
Some mutual funds pay interest, though it depends on the types of assets held in the funds' portfolios. Specifically, bond ... Read Full Answer >>