|
| Glossary of
Mutual Fund Terms
|
|
|
| Click above
to find out how Fiscal Agents can assist you
on investing in Mutual Funds. |
|
|
|
Now
Quick-Nav enabled!
Use this link to connect you directly to additional useful information
related to Mutual Funds.
|
| |
 The
Money Management Newsletter: Investing
in Mutual Funds
Check out the stocks contained within the mutual
fund as well as the manager's investment philosophy
By The Money Mangement Editor
Money Management Newsletter - April 2004
Are you looking for a suitable mutual
fund in which to invest ? One of the first things most people look at
is performance numbers. Long-term performance is certainly important and
should form a key part of the criteria or your selection process. Here
are four other things you should consider.
Understanding the investment philosophy
By definition, a philosophy is a set of values, ideas and opinions. When
applied to investing, a philosophy is the belief about how to best produce
long-term wealth. It is the structure on which the fund manager or Fund
Company believes they will create unit holder wealth. The philosophy should
be more than words on paper: it should be something that you can clearly
see the fund company and its manager's practice consistently.
Understanding the investment principles
 |
A set of principles that guide investment decisions
is critical. By understanding various fund manager's principles, and how
they treat the investments in their portfolios you can more closely align
your investment needs with a fund manager. Our Investment
Philosophy Score Card can help you determine your investment objectives
and risk comfort level by answering a few short questions. For example,
if you're a conservative investor you may want fund managers that include
capital preservation as one of their investment principles.
Know the businesses in the fund
When you invest in an equity mutual fund or even a corporate bond fund,
you're really investing in a collection of businesses. The success of
these businesses will be an important contribution to your wealth creation.
While one of the benefits of a mutual fund is that you have access to
professional managers who make the investment decisions for you, it does
not mean that you should be completely unaware of the companies in which
they invest. Fund managers may continually make changes to their investment
holdings but as a minimum you should try to stay abreast of their largest
holdings and largest industry weightings. Check the most recent annual
or semi-annual report or go to the fund company's web site for the information.
One reason for doing this is that some fund holdings might over time become
more aggressive than you would prefer (ie over weighted in technology
or undeveloped markets) which may cause you to re-evaluate your continued
participation.
Know the fund manager
Fund managers are the key people with whom you entrust your wealth creation,
so it's worth getting to know their career and investing track record.
Sources of information include industry web sites such as morningstar.ca
and
globefund.com. In addition to fund performance information, these websites
also provide independent analysis of the funds. Some mutual funds maintain
a team approach to management, and if so the group of individual manager's
background information will be shown. The manager or management team should
have some longevity with the fund or experience with a similar type of
fund and their decision making should also be consistent over time.
FiscalAgents.com resources
* *
*
|
|
Use this link to load a printer-friendly
version of this document. |
Have a question regarding this article? Use our feedback form to send us a note.
©
, Fiscal Agents Money Management Newsletter
25 Lakeshore Road, Oakville, On L6K 1C6.
(905) 844-7700
|
|
|
