Course 411: Buying Rookie Funds
What Is the Manager's Strategy?
In this course
1 Introduction
2 Has the Manager Run a Mutual Fund Before?
3 What Is the Manager's Strategy?
4 How Much Will It Cost?
5 Will This Fund Offer Any Extras?

You need to understand the manager's strategy to set realistic expectations for your investment. When the market does X, what can you expect from this fund? Also, when those inevitable dry spells come, you'll understand why, and you won't be tempted to cut the fund loose.

Further, you need to know what the portfolio looks like today, because it can give you some idea about the fund's future risks. Remember, since these are new funds, you don't have historical risk measures, such as beta or standard deviation, to serve as clues about riskiness. Funds that feast on expensive, high-growth stocks will probably carry higher betas and standard deviations than those funds that look for underpriced securities. Funds owning fewer stocks will generally be more volatile than those holding many. Finally, managers who concentrate in particular sectors will probably give you some volatility, too. You can find all this information by scrutinizing a fund's portfolio information on Morningstar.com.

Next: How Much Will It Cost? >>


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