Your Mutual Fund Annual Report: A Wealth of Information

Looking at your mutual fund report can provide you with a lot of great information that you can use as an investor. At the end of each year, you need to reevaluate your holdings and determine if the mutual fund should still be in your portfolio. Here are a few items that you need to look at in your mutual fund annual report.

Returns

One of the most important sections of the report to look at is the returns. Ultimately, the goal of a mutual fund is to provide a good return on investment. If your mutual fund is not doing that, you might want to look elsewhere. In some cases, your fund will not have a winning year. However, if you look at the long-term performance and the fund has not historically done well, then you should think about finding another fund. Look at the one-year, five-year and 10-year returns to get a good perspective.

Holdings

You should also pay attention to the holdings section of the annual report. This section tells you exactly what securities mutual fund is holding on to. This will give you a good idea of the true strategy of the mutual fund. Even though the objectives section generally tells you what they are trying to accomplish, looking at the holdings will often give you a better picture. 

Expenses

The expenses section is another important piece of information. This section, you can see exactly how much money the mutual fund charges in expense ratio. The expense ratio has a drastic effect on how much money you can make from the mutual fund. It is taken out of the returns that are generated from trading activities. If you want to be successful with investing, you have to pay close attention to the expenses because they will minimize your returns overall. Examine the company expenses. If they do not appear to be efficient, you might want to consider going elsewhere.

Risks

You should also take a look at the level of risk that is being used by the mutual fund. You need to take into consideration the level of risk that they have to use in order to get the returns that they are posting. If they are posting slightly above average gains and using a very large amount of risk to get those gains, do not invest. Every investor has their own unique level of risk. You need to make sure that the level risk of the mutual fund matches up with your own risk tolerance.

Officers

You may also want to be aware of the officers of the mutual fund. In the annual report, you should be able to tell you the officers are that are associated with this particular fund. While you may not know most of them, you should be able to do some research about them and make sure that they have a good reputation in the industry.

blog comments powered by Disqus
Scottrade