(Money magazine) – This is the second part of Money magazine’s series on How to make your money safer.
While mutual funds are managed by professionals, these pros are also human beings who make mistakes and come with varying degrees of skill. Time to put them to the test.
Step one: Minimize risks caused by fund managers
Start by screening for funds that beat their average category peers over the past three, five, and 10 years.
Great runs can’t always be repeated, but “managers that underperform tend to continue to underperform,” says Litman Gregory analyst Jack Chee.
You want funds with a proven track record over long periods. But you must also check to see that the fund’s current managers are responsible for that record, so eliminate portfolios with manager tenures of less than 10 years. Continue Reading…