Before you pony up cash for an investment, first dedicate time for doing some homework. Outlined below are several key questions to consider before investing in a particular mutual fund. You can find these answers in a fund’s prospectus.

 

Check the Prospectus

Before investing in any mutual fund, carefully consider information contained in the prospectus, including investment objectives, risks, charges and expenses. Free prospectuses may be ordered from the fund company or from Credence Global Bank Invest.

Many but not all prospectuses are available online. Not all mutual funds are available through Credence Global Bank Invest. Read the prospectus carefully before investing. Investment returns will fluctuate and are subject to market volatility so that an investor’s shares, when redeemed or sold, may be worth more or less than their original cost.

Factors to Consider Why They’re Important
What is the fund’s investment objective? There are three general investing goals: growth through capital appreciation, periodic payments of income, and protection of your initial investment. A fund may focus on one or more of these goals.
What role will this fund play in my portfolio? A diversified portfolio has a variety of funds that invest in different asset classes. You should understand what a fund invests in, how it fits into your overall portfolio, and how it attempts to achieve its investment objective.
Is the fund actively managed or does it track an index? The return of an actively managed fund depends in part on the manager’s selection and timing of individual securities. A passively managed fund is generally designed to try to match that of a given index of securities—for example, the S&P 500.
What is the fund’s short-term performance record? Investing styles and asset classes tend to move in cycles. A fund that has done well recently may be benefiting from such a cycle, which may or may not continue.
What is the fund’s long-term performance record? A fund’s prospectus must list its total return for each of the past 10 years. Comparing long-term performance can indicate how a fund has performed through various market cycles. Bear in mind that past performance is no guarantee of future results.

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