I include below five factors that I consider when evaluating a mutual fund offering that are a little bit different than the standard/conventional advice that is repeated ad nauseam on the topic:
#1. Pay attention to the manager rather than the fund when calculating performance history. Most people rely on a fund’s performance history when reviewing the 3, 5, and 10 year history for a mutual fund. But you should care about the specific person. For the past five years, it’s not that there has been something magical about “center fielder for the Los Angeles Angels.” Instead, Mike Trout is the magic player, and he happens to be center field. People fall into the trap of following the track record of the fund name rather than the manager. It is the manager who selects the stocks, and that is the track record you should study.