4 Indicators of a Lousy Fund Company

Choosing a mutual fund company can sometimes prove to be difficult. With so many options on the market, you might not know to pick. However, there are certain indicators that you can look at to make sure that you avoid doing business with a lousy mutual fund company.

1. No Customer Service


One of the first things that you should notice about a mutual fund company is their level of customer service. You want a mutual fund company that places a high value on pleasing their customers. You are going to be giving them a significant amount of your money over the years. Therefore, you want someone that you know that you can trust and will take care of you if there is a problem. Many times, you will be able to notice a lack of customer service as soon as you start dealing with a company. You will be on hold much longer than you should. Representatives will not return phone calls, or they might not directly answer your questions. You can also do your own research online to see what other customers have to say about a particular company. If they are notorious for having bad customer service, you should be able to find some other people with the same opinion. If you get the feeling that a mutual fund company does not have good customer service, you should immediately begin to look elsewhere.

2. Bad Performance


A lousy fund company will also demonstrate a lack of mutual fund performance over time. Before getting involved with a mutual fund provider, you should do a detailed analysis of the performance that they have provided with their mutual funds over the years. You should be able to see a pattern of sustained growth in a majority of their funds. If you do not, there is really no point in investing with them. If they have not been able to achieve gains up to this point, there is no reason to believe that they will be able to do so from here on.

3. High Load Fees


Something else that might sour you on a particular mutual fund company is having to pay high load fees. A load fee is like a commission that is paid to the broker that sold you your shares of a mutual fund. In today's market, there is really no reason that you should have to pay a load fee if you do not want to. There are many no-load fee mutual funds on the market. Therefore, unless you really like something about a particular fund, you do not have to pay a load fee.

4. High Expense Ratios


The expense ratio is the amount of money that you will pay on an annual basis in order to maintain the mutual fund. Many companies would have you believe that a higher expense ratio indicates a better mutual fund. However, there is no correlation between mutual fund performance and higher expense ratios. Therefore, you should consider staying away from companies that charge more money for expense ratios than others.

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