Now let's discuss the mutual fund list you referred to.
#1 --- all 3 and 5 year "returns" are going to be skewed heavily on the up side because we're coming off near depression like lows! It's easy to show big 3 and 5 year returns IF -- you were in at the bottom and that's your comp.
#2 --- If you've read this thread -- you'd understand that you can build your own mini mutual fund (if you have 25K or more to invest) and skip the fees etc which affect your return.
#3 --- People are naturally drawn towards large numbers and tend to invest in Mutual Funds with the largest returns "lately". History is not a guarantee of future performance. In other words the funds that show the largest returns today may be under performers going forward. For example. They might be heavily invested in Financials -- which went way south in '08 and '09 and have made huge comebacks… or they may be invested in home builders and ditto - they've made big comebacks. SO ----- You need to really look behind the curtain of any mutual fund to see what they're invested in and then think about whether or not that set of investments has seen their best days -- or is there room to expand going forward.
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