We are often advised to not "chase returns" when looking for mutual funds. Don't go for the funds that are doing great in the past year--they're ripe for a fall.
Fair enough. But that does not mean we should avoid those funds. We just need to see more info before deciding.
When I choose mutual funds for the portfolios I run for clients (and myself--I eat off of the same plate from which I serve), there are many factors and data points I consider. One is the relative performance history over numerous, not just recent, time periods.
Almost every mutual fund I use has been a top-quartile performer in its category in the 10-year, 5-year AND 3-year periods. Every fund can have a good or bad stretch, but the ones that are basically always doing better than most of their peers... those are appealing.
The process is rigorous. If you can do it yourself, great! If not, though, it is worth the money to hire someone like me to do it for you.
An investing and financial strategies blog offered by Gary Partoyan, veteran financial advisor and owner of Potomac Wealth Strategies, LLC.
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