WSJ Fund Analysis

An October 2012 article in The Wall Street Journal (WSJ) recommends the following approach for overseeing a mutual fund:

 

[1] Set realistic return expectations.

[2] Top managers often have mediocre returns in ~ 3 out of every 10 years.

[3] If a fund falters, give it at least two years to recover.

[4] Large fund inflows may result in poorer returns in the future.

[5] Look for funds that just had one to two years of bad returns. [6] If a client tends to panic        during downturns, consider a balanced fund.

 

The WSJ article also included a survey of WSJ readers who listed the mistakes they most often made with their mutual fund positions:

 

Biggest Mistake	% of Respondents
Being Too Cautious	44%
Buying Too Late, Post Run-Up	18%
Picking a Volatile, Niche Fund	14%
Not Firing a Fund Soon Enough	14%
Not Diversifying Enough	7%
Firing a Manager Too Soon	3%