3 Ways to Compare Mutual Funds

In order to accurately compare mutual funds, there are a number of different factors to consider. Here are a few ways to compare mutual funds effectively.

1. Expense Ratio

One of the most critical factors that you should look at when comparing mutual funds is the expense ratio that is charged. An expense ratio is what a mutual fund charges to maintain the fund. This pays for it the fund managers salaries as well as administration costs. Finding a fund with a low expense ratio means that you to keep more of the gains that are realized from the trading of the fund.

2. Investment Strategy

The investment strategy of the fund is another factor that you want to consider. You need to see whether the fund is a growth fund, an income producing fund or a mixture of both. You need to make sure that the investment strategy of the fund matches with your own.

3. Returns

Something else you want to consider is the return that has been generated by the fund. Look at the historical performance of the funds and see which one has displayed steady growth over the years. You should keep in mind however, that the past results of the fund do not guarantee anything in the future.

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