Fall Good Time To Assess Your Mutual Funds

As each year heads into its last few months, some investors make a practice of subjecting the mutual funds they own to an annual review.

The aim of a general review is certainly worthy: To be a disciplined investor, rather than just a random collector, by making sure that your funds are living up to your original hopes for them and still fit with what you are trying to accomplish.

Besides, it makes sense to demand as much of funds you have owned for a while as you would of any you are considering for the first time.

“Pulling the trigger on a disappointing fund is never easy,” says the Value Line Mutual Fund Survey.

Any fund that has changed its name, its manager or its explicit method of operating demands close scrutiny.

If it is now following a course that no longer suits your purposes, it becomes a candidate for culling even if it is still earning good performance scores from ratings services and in the financial press.

What if a fund just isn’t producing the kind of return you hoped to see?

In the case of a stock fund that had a strong record until recently, Value Line suggests allowing a grace period of at least a year or two.

That way, you lessen your chance of selling out merely because the fund employs strategies or favors categories of stocks that have fallen temporarily out of fashion.

“Bond funds, however, generally deserve less ‘down time’ than stock funds,” Value Line says. “That’s because all bond funds, in a sense, drink from the same trough. There are fewer variables, in the sense that bonds of a certain quality generally provide a similar yield.”

You also may be prompted to consider leaving a fund if you are unhappy with its fees and expenses.

Or perhaps you got started in fund investing by buying a fund with a load, or sales charge, through a broker, but have since educated yourself to the point that you now want to concentrate on no-loads you can choose on your own.