There are several criteria that should be considered when you compare mutual funds. Many people just look at the historical pricing and make a judgment on that alone. This is only a piece of the overall puzzle and you should consider the full picture before you make a decision.
Of course, we have to compare the price of the mutual funds and the historical price. You cannot compare mutual funds accurately without including price as a metric.
Be sure that the funds you are comparing are both in similar if not identical industries, sectors, or have the same mandate. You should expect to see both funds rise and fall at roughly the same times throughout history. It is a good idea to see which fund fell the most and which fund went up the most.
To truly compare mutual funds, you should definitely have a look at the fund manager in particular. In many cases, this is the most important aspect. Is the fund manager involved with any other funds? If so, how are they doing compared to their peers? Does the fund manager stick to his mandate 100% of the time or does he drift off course? If he drifts, how has this departure from his mandate end up?
For the most part, I don’t compare mutual funds, I compare mutual fund managers. There are quite a few that I like very much and I now have my portfolio narrowed down to the point I don’t do much trading. For every exceptional fund manager there are a hundred I wouldn’t give a nickel to at gun point. Be sure you find the managers you like and stick with them!
Every fund is going to have some fees, but some have a lot more than others. You should put in the time to do the research into exactly what fees you should be paying and which ones are just kind of made up. Sometimes and otherwise good fund may be a disaster because of fees. The fund company books a good ROI a few quarters straight and wants to raise the fees. This is shady and I applaud the investors that immediately pull out of the fund and other funds they have sponsored by any given company. Some fees are fine and expected, but some are just out of line.
When I compare mutual funds these are the criteria I consider. As you can see, I focus mostly on the fund manager and how the specific fund performed in relation to its peers. The price history is the least important part, if you consider it in terms of just up or down. You have to frame the results with other things such as the economy and other events.
There are several criteria that should be considered when you compare mutual funds. Many people just look at the historical pricing and make a judgment on that alone. This is only a piece of the overall puzzle and you should consider the full picture before you make a decision.
Of course, we have to compare the price of the mutual funds and the historical price. You cannot compare mutual funds accurately without including price as a metric.
Sector/Mandate
Be sure that the funds you are comparing are both in similar if not identical industries, sectors, or have the same mandate. You should expect to see both funds rise and fall at roughly the same times throughout history. It is a good idea to see which fund fell the most and which fund went up the most.
Fund Manager
To truly compare mutual funds, you should definitely have a look at the fund manager in particular. In many cases, this is the most important aspect. Is the fund manager involved with any other funds? If so, how are they doing compared to their peers? Does the fund manager stick to his mandate 100% of the time or does he drift off course? If he drifts, how has this departure from his mandate end up?
For the most part, I don’t compare mutual funds, I compare mutual fund managers. There are quite a few that I like very much and I now have my portfolio narrowed down to the point I don’t do much trading. For every exceptional fund manager there are a hundred I wouldn’t give a nickel to at gun point. Be sure you find the managers you like and stick with them!
Fees
Every fund is going to have some fees, but some have a lot more than others. You should put in the time to do the research into exactly what fees you should be paying and which ones are just kind of made up. Sometimes and otherwise good fund may be a disaster because of fees. The fund company books a good ROI a few quarters straight and wants to raise the fees. This is shady and I applaud the investors that immediately pull out of the fund and other funds they have sponsored by any given company. Some fees are fine and expected, but some are just out of line.
When I compare mutual funds these are the criteria I consider. As you can see, I focus mostly on the fund manager and how the specific fund performed in relation to its peers. The price history is the least important part, if you consider it in terms of just up or down. You have to frame the results with other things such as the economy and other events.
