How do you choose funds to invest in?

supersam_batman

How do you choose what funds to invest in? It seems that if you here about a fund to invest in its already too late. In which case that means you have to speculate as to what too invest in before everyone jumps on. But how do you choose that fund?

Cheers

Lokolo

On risk attitude, the areas the fund is in, what the fund consists off, who is running the fund.

Aegis

supersam_batman wrote: »

How do you choose what funds to invest in? It seems that if you here about a fund to invest in its already too late. In which case that means you have to speculate as to what too invest in before everyone jumps on. But how do you choose that fund?

Cheers

If you go for a balanced mix of funds and drip feed your investments, then you don't need to worry too much about getting in to the next big thing. You set up your portfolio according to your objectives and risk profile, then you let it grow over time.

If you chase after the next big thing, you'll probably go a bit wrong with fund investing. It's a strategy more often associated with share dealing, and requires a lot more research and effort to get right!

dunstonh

Decide on the strategy you intend to use first. i.e. sector or asset allocation or high yield to name a few. Then decide your risk profile and what you want to achieve and then look at future potential. This can often mean looking at the funds which have gone down the most rather than the ones that have gone up the most.

Also remember that the sector you look will have funds of varying risk. Some funds may be low risk, some high risk. During good times the higher risk funds may outperform the lower risk funds but find the situation reversed in bad years. F&C High Income could be a good example of that. Although the manager replacement may have helped.

Fashion investing is what you need to avoid. If something fashionable then you have probably missed the boat. In the tech stocks days, the Money Mail started promoting tech funds after they had gained 90% of the overall gains before they went on their downhill plunge.

There is no harm having a bit of higher risk in the portfolio as long as you diversify and it fits your strategy and risk profile.

munk

There's an article/thread discussing how to choose funds here:

http://forums.moneysavingexpert.com/showthread.html?t=875119&highlight=how+do+you+choose+funds
MSE Discussion: What are your favourite ways to find investments?

purch

How do you choose funds to invest in?

Firstly I look at all the Funds that charge a 'Performance Fee' and eliminate them. Non of them significantly outperform their peers, in fact most of them underperform similar funds.