Was Your Mutual Fund A One Hit Wonder?

We love lists.  In fact, we have become addicted to them.   Every year, magazines and newspapers publish lists of the best and worst performing mutual funds.   As investors, we often have an impulsive nature to chase the latest and greatest mutual funds often without doing the proper due diligence before we invest new money or transfer our IRA accounts.   What should you ask before investing in a top performing mutual fund from last year? Was this a sector play?   In any given calendar year, one specific sector of the market may dominate versus other sectors of the market.  Just because gold or technology or emerging markets were the top performing sector from the year prior doesn’t necessarily mean they will repeat in the following years to come.   You should be certain that particular sector matches your long term investment objectives before you invest your money. Is it the same manager?  Sometimes mutual funds perform very well and then a given ...

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