Clergy Financial Management
Mutual Funds
Deciding which mutual fund to buy is based on many factors, including your long-term goals and the other assets in your investment portfolio. Let's say you know that you won't need the funds for at least five to seven years (therefore, we are discussing money that you won't need in the short term) and you've identified an asset class to invest in. Now you can look at quantitative and qualitative factors.
The quantitative factors to consider relate to the fund's performance. You can look at the Morningstar rating, but this shows only a small piece of the picture. Also look at the Morningstar category rating, which shows how well this fund did compared to its category peers. Look at the expense ratios of the fund. Generally, for a large-cap fund, you shouldn't pay more than 1 percent. For a small-cap or international fund, the expense ratio should be less than 1.75 percent.
Since these percentages are broad rules of thumb for actively managed funds, if you favor index funds, the expense ratios should be well below these amounts. Usually, you can get excellent funds without paying a load, sometimes called a front-end or back-end load. Also look at the fund's returns. Compare the returns to a benchmark index that is similar to the fund's asset class.
Decade's Top-10 Stock Mutual Funds
Best of the '90s
| Fund | Gain |
| Putnam New Opportunities | 1,092% |
| RS Emerging Growth | 1,016% |
| Fidelity Aggressive Growth | 996% |
| Van Kampen Emerging Growth | 937% |
| Janus 20 | 919% |
| Specta | 854% |
| MAS Mid Cap Growth Institutional | 812% |
| United New Concepts | 734% |
| Fidelity Advisor Equity Growth | 720% |
| Managers Capital Appreciation | 718% |
| Average U.S Diversified Stock Fund | 317% |
| Standard & Poor's 500 Stock Index | 410% |
Wall Street Journal
12/19/1999