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Wednesday, November 18, 2009

Best Performing Mutual Funds - Tips to Finding the Top Mutual Funds to Invest In

Mutual funds are an excellent investment vehicle and should seriously be considered as part of your portfolio if you want to be a successful investor. The benefits of finding the best performing mutual funds will allow you to diversify your investments while significantly reducing your risk.

While the current trend is to simply look at the past performance of a particular fund, this method simply does not work as what was successful in the past may not work as well in the future. Even looking at trade volume is a poor indicator of how well a mutual fund will perform.

So given these circumstances, how can you absolutely determine the best performing mutual funds? The short answer is that the best mutual funds will depend on what you intend to invest in whether it is a fund that specializes in stocks or bonds, and also how much risk you're willing to take.

With that said, there are several companies that analyze in detail thousands of available funds and assign them rankings based on very specific criteria. One such company is Morningstar that uses a simple star rating system to rate particular funds based on past performance and current trading value.

Another place to finding the best performing mutual funds is Lipper Leader Fund ratings which is similar to Morningstar but does things a little bit differently. They use five criteria in rating funds from total return, consistent return, preservation, tax efficiency and expense.

These factors combined helped to draw up a better picture of how well a mutual fund has performed in the past and how likely it is to perform in the future. In addition, there are also business periodicals such as Business Week and the Wall Street Journal that offer invaluable insight into popular mutual funds.

The bottom line to finding the best performing mutual funds is to thoroughly do your research behind a fund that you are interested in and combining data from different sources as to whether the fund is a smart investment. Which fund you invest in ultimately depends on you.

One of the most essential factors is doing thorough research into the board of advisory. Be sure that they have a track record of proven success and that they have adequate experience.

courtesy of http://EzineArticles.com/?expert=Warren_Parker

Friday, November 6, 2009

Great Things About Asset Allocation Funds

Asset allocation funds can be a great way to approach investing because they allow you to benefit from the movements of stocks, while at the same time avoid the volatility they come with.

They do this by investing in other asset classes such as bonds as well as stocks. Some of the major benefits are.

1. Escaping volatility

Stocks can be very volatile and that can be very risky at times. So if you just buy a portfolio of stocks and the market crashes you could lose a large chunk of your portfolio. But if you had a diversified portfolio between both stocks and bonds a market crash might not affect you as much.
Bonds can be used to help you get through a bears market.

2. Diversified

How many times have you heard about diversification? Well that is because it works for a long term portfolio. The first thing you need to consider is risk so if you only invest in 1 asset class you are going to hold a high amount of risk.

If all you have are stocks and they start falling all of a sudden your portfolio is going to go down with it. This can be used for bonds too. A more diversified approach gives you a better long term outlook.

3. Some Funds Can Switch

Some Asset Allocation funds can switch from investing primarily in 1 asset class to another. So if stocks start outperforming bonds you can switch into being more heavenly waited on invest in stocks which can help you benefit from changes in any market.

courtesy of http://EzineArticles.com/?expert=Shaun_Rosenberg