How to Monitor a Mutual Fund

Even though the rising tide of the stock market has lifted a lot of mutual fund "boats," it's still essential to keep an eye on where your particular boat is heading.

Difficulty: Moderate

Instructions

Things You'll Need:

• Personal Financial Software
• Wall Street Journal
• Financial Calculator
• Brokerage Accounts

1. Look for your mutual fund in your newspaper's business section and check its performance about once a week.

2. Compare your fund's performance with others in its class each month or quarter. If its performance is substandard but its group is doing well, consider switching to another fund in that class by contacting your broker or the fund manager.

3. Check the major stocks in your funds each year to be sure that the fund manager has not shifted the fund's investment emphasis in a direction that throws off your diversification plan.

Tips & Warnings

• If the fund you're in is growing nicely, consider buying more shares.
• Just because you love one fund's performance, don't disturb your allocation balance by buying too much of one fund.

[scalecreations]

on 10/30/2009 I agree with redrury and this has been the traditional way of dealing with mutual funds. Just to "let it ride". BUT-- If i hadn't quickly moved all my mutual fund investments to guaranteed interest before the big crash I would have lost a large and unnecessary amount of cash. (It was just a hunch but it worked for me.) I now do like to trade a bit in my mutuals especially now when you can buy low. There's no hugh amounts to be made but I have picked up a few thousand here and there by doing this. Who knows these days...

[sahill]

on 6/19/2008 Where's the information here? I didn't learn anything reading this.

[rcdrury]

on 12/27/2006 Apparently, someone doesn't understand the concept behind a mutual fund. How do you "monitor" a mutual fund? You don't! Mutual funds are vehicles for long-term investing, and overall success depends on proper allocation, faithful dollar cost averaging and rebalancing. Specific investment performance is of ironically low importance in achieving long-term success. Mutual funds should be purchased based on research of investment philosophy, credentials of the fund manager, fees, and past performance. Then they should be pretty much ignored. The most "monitoring" that should be done is a brief glance at your quarterly statement, and even that should be largely disregarded. Of course, if your fund proves to be a dog over the long term (at least several months, if not years), relative to funds in the same risk class, you may need to reevaluate; but don't be hasty to do so. Investors with a short-term perspective don't belong in mutual funds.