×

How To Search for a Winning Fund

Start your search for a good mutual fund by defining your level of risk.

Don't go by the funds' most recent performance but look at its gains over several years.

Look for a fund without any upfront sales charges, also called front load.

Check expenses and remember that this is money out of your pocket. Look for a fund with an expense ratio below 1%.

Check the turnover rate. Anything below 50% is a good sign. The fund should be about fully invested with little or no cash reserve.

Exchange-traded funds are an easy way to invest because they can be bought and sold as a single security. Just about anything you can do with a share of common stock, you can do with an ETF. Many ETFs offer options.

In general, ETFs are flexible and tax-efficient. ETFs don't deal directly with shareholders and therefore have lower costs.

Unlike mutual funds, ETFs can be traded intraday, shorted and placed with stop or limit orders. While ETFs can be traded throughout the day, you don’t want to trade extensively because this drives up cost and erodes your returns.