Stay in the Loop with Your Mutual Fund Annual Report

A mutual fund annual report can provide you with a great deal of information about your investment. Many investors fail to read the mutual fund annual report that they receive. However, this is a mistake, and you should take greater notice in the information provided by the report. Here are a few things that you could learn from your mutual fund annual report.

Returns

One of the first things that you will realize about your mutual fund annual report is the return. The report outlines how much has been made over the previous year, and what type of yield this represents. This could be represented in a number of different graphs or charts that are designed to help you easily navigate the information.

This section will also tell you whether or not your fund beat certain benchmarks along the way. This is a very valuable tool when deciding whether or not to stick with a mutual fund. If your fund cannot beat the benchmark that is going against, then there may be no reason to stay with the fund.

You will also notice statements that project what you may make over the next year or five years. These are projections based upon past performance and the investment strategy the your fund employs. If your fund is underperforming, this section may also include an explanation as to why the fund manager did not do as well as they should. You should analyze the statements and determine if the explanation is good enough for you.

Holdings

Another critical part of the mutual fund annual report is the holdings section. This section tells you exactly what the mutual fund has invested in and what they still have in the basket. This can be a very great resource to utilize to see if mutual fund is moving in the right direction. This part of the report will tell you what investments they have and signal what you might look for in the future.

You will need to make sure that these investments align with your personal investment objectives and make a decision as to whether or not you should move forward. For example, if you are more of a passive investor, substantial holdings in the technology sector may not be to your liking. In this case, you may want to sell your shares in the fund.

Expenses

The annual report will also tell you exactly what expenses were incurred over the previous year. This should be a very valuable piece of information to you as an investor in the fund. If the performance of the fund did not perform as well as you would have liked, the expense a section could explain why. If there is a lot of what you believe to be unnecessary expenses, then you may want to look elsewhere for your investing needs. They will also outline any future expenses that you should expect to incur over the next year.

blog comments powered by Disqus
Scottrade