P

eople who have spent a long time in the world of investments may already be familiar with mutual funds. These sorts of investments are relatively easy for newcomers to pick up.

There are diverse types of mutual funds, ranging from money market mutual funds to protected ones. However, it is not enough to simply know about the different types. When it comes to mutual funds, there is usually an investment manager in charge of managing investment products for investors.

This is something that all prospective investors should keep in mind. Make sure you pick the best investment manager for the job. Doing so, however, is easier said than done.

There are many factors to take into account, like track records and the integrity of the manager in question.

Others include fees, service quality, funding, customers and also the investment style of the investment manager.

Here are some things to consider as you pick out a mutual fund investment manager for you:

Experience

It is always preferable to pick an investment manager from a reputable company with a longstanding background. Many investment management companies have been operating for decades and have international networks and affiliations.

If a company has been around for at least seven years and has a reputation for good management and profit-making, then they can be said to have a good track record.

Performance

When picking a mutual fund investment manager, be sure to pay attention to their work performance.

Take note of the extent to which mutual fund profits fluctuate under their management. Low fluctuations are a reflection of good work performance.

The best mutual fund investment managers always have consistent work performance rates, and aren'€™t always just about generating high returns.

Investment style

Investment managers will typically make mid-year financial statements. Study the content of these reports to determine how your investment managers go about investing. Pay attention to the types of stocks or bonds.

Do they have plenty of these investments from big companies but with slow growth rates? Or do they have these investments from smaller companies but with rapid growth? All of this has to do with the investment style of your preferred manager.

Costs

Every investment manager has their own cost structure covering the cost of purchases, management and mutual fund withdrawals. Be sure to pick an investment manager who sets reasonable rates according to the above criteria. But if they are really competent, then they naturally will set much higher rates.

These are some things to consider as you pick an investment manager for your mutual fund. Good luck.

If you have found the right investment manager, then the next step is choosing mutual funds. Things to consider when choosing mutual funds include:

Your risk profile

Every person has his or her own risk profile: conservative, moderate and aggressive.

Your risk profile can be seen especially from how you react to a situation in which net asset value (NAV) goes down.

If the NAV drops by 5 percent, for instance, then a conservative investor will have a cold sweat and difficulty sleeping.

However, an aggressive one will stay calm despite the NAV declining by, for instance 10 percent caused by share price fluctuation. Commonly, banks that sell mutual funds provide an assessment form that will assess the risk profile of prospective investors.

The risk profile determines which mutual funds should be recommended, whether money market, fixed income or a combination of them, or stocks.

Reputation of manager

Investing in mutual funds is like entrusting something to someone for a short period of time and letting them manage your money.

For that reason, investors usually feel safer '€œdepositing'€ the money with someone whose reputation is well recognized by the national finance world, and even internationally.

Reputed national and international companies that manage funds will attract prospective investors.

Mutual fund performance

The easiest way of choosing a mutual fund is by looking at a table comparing the returns of various mutual fund products. These can be monitored in daily newspapers, which provide daily data update. Just choose which mutual funds have given the best profit for the last one to three years.

Nevertheless, past performance cannot be used as a pattern to determine future performance. It is necessary for investors to study the prospectus to understand the detail of the investment management, including who the investment managers are and what the main target is of the mutual funds.

A good investment manger will publish an easily accessible prospectus.

Apart from the prospectus, it is better for investors also to read monthly fact sheets and annual reports to assess the performance of their mutual funds.