When you are ready to buy a mutual fund, you need to ask some important questions before the actual transaction. I tried to put those major questions together to help you create a check list. These questions are not written in stone, and can be used as a first step to screen funds. In my future articles I will go in greater detail for each of these questions.

1. What are the expenses and fees?
2. What is the industries covered by this fund? Do you really want to invest into fire arm industries, or you want to help saving the environment?
3. What is the fund’s ranking within it’s peer group for one, five years, ten years? Is it constant and rising?
4. What is the fund’s style? Does the fund’s manager go after growth or value?
5. Is the fund permitted to use derivatives? If so, how?
6. Is it domestic or international fund? What is percentage of assets spread overseas?
7. Was the fund’s manager replaced recently? How long has the manager been with the fund?
8. Is the manager well known? Do you have any records of his past success?
9. How much of assets is currently in cash?
10. How big is the fund? Did it grow rapidly in recent months?
11. Has anything about fund’s operation changed recently - expenses, fees, investment objective, asset allocation?
12. Are the listed (purchased) stocks passing your Fund Check Up measurements (P/E, P/B, PEG ratios, etc)?

You may create a spreadsheet with several funds and fill it up with the answers for each of those questions. After you accomplish that, you will have very good understanding of the chosen funds. Choose the winner and make big profits. That’s a lot of research, but it will pay back - every time you’ll be watching your money grow.

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