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What should I look for in a Mutual Fund?

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Mutual funds are required to provide a prospectus to investors. The prospectus is a document that details the operations of the mutual fund, so it is an important resource for you as you consider a particular mutual fund. As you review the prospectus (and the website of the mutual fund, if one is available) you should ask yourself several questions:


  • Who manages the fund? What is the track record of that manager? Remember that the fund manager will control your money after you make your investment. It’s therefore extremely important that you’re comfortable with the past history and ability of that fund manager.

  • How has the fund performed in the past? Even if you’re comfortable with the ability of the mutual fund manager, you must consider the possibility that the manager will leave for another opportunity at some point in the future. Given that fact, has the fund showed stability and success in the past, regardless of the manager?

  • What is the investment strategy of the mutual fund? There are many, many investment options available to a fund manager within the context of a mutual fund, so make sure you find a fund that adheres to a strategy with which you’re comfortable.

  • What are the fees? If the fund is a load fund, what are the service and commission charges? Additionally, what is the annual operational/administrative fee? Both types of fees vary from fund to fund, so shop around for a fund that you feel is fair in its fee structure.

  • How are dividends distributed? Will you have access to your shares each business day? One of the biggest advantages of mutual fund investment is the convenience it offers. Make sure that your fund is, in fact, convenient for you.



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