Things You'll Need:
- A funded account where you can buy and sell mutual funds. A computer with internet capability.
-
Step 1
Be on guard for the warning sings. Has your fund manager quit? Has the fund company merged with another group or been sold? I would not sell a fund just because the fund has a new manager. Often the fund does better under a new manager who has studied under the old manager. Just because a fund company has merged or been sold does not mean the fund should be sold but you need to watch the fund's performance more closely.
-
Step 2
Check the funds performance against its index or peers. Many websites have historical data available. I like to use the most recent bottom of March 9, 2009 as a base point and go a few months out. Many good funds have way outperformed the market during this time. If you fund is lagging the market you may want to see how it did against the market the year pervious to March 9, 2009. If the market was down 50% and your fund was down only 20% your fund is doing just fine. Results over the long term are the goal. You should expect to see balanced funds and conservative growth type funds do better than the market when the market is going down but they will not do as well in times of market strength. These types of funds can outperform the market over the long haul and be more suitable for the risk adverse investor.
-
Step 3
If the fund gets too big sell it and buy another in the asset class you wish to be in. Large fund have a very bad track record. My upper threshold is 3 billion in assets for domestic stock funds and 10 billion for international funds.
