Monitoring the Fundamentals of Your Mutual Funds

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Monitoring the Fundamentals of Your Mutual Funds

Just as you watch for unexpected changes in your portfolio, watch for changes in your mutual funds, too. You want your funds to meet the same investment criteria today as they did when you first bought them. You set out your investment criteria in your investment policy statement, and you should hold your mutual funds to those criteria. If they no longer meet your criteria, do they still belong in your portfolio?

Consider your funds carefully

Just because a fund no longer meets one or two of your criteria is no reason to sell. But if a fund no longer clears most of your hurdles, it is a sell candidate.

For example, perhaps you purchased a fund five years ago to fill a small-growth role in your portfolio. If today, however, it is a mid-cap growth fund, you’re investing in a fundamentally different fund than you once were.

For more information

Many financial Websites, such as Morningstar, offer alerts to investors signaling key changes to holdings. The alerts inform investors when, say, a mutual fund changes star ratings or moves into a new category position.