It is not easy to select one or a few to invest among so many funds in the market. The following principles and standards may help reduce the chance of mistakes in selection the right ones.
1. Select funds that suit investment goals
Different funds are distinguished among themselves in investment scopes, risk profiles and expected levels of return. Investors may choose a fund in line with their investment goals (mainly refers to the trade-off between risk and return). Balanced fund is more suitable for those who expect low-risk and stable return in long-term. Growth fund is for investors with a higher risk tolerance who intend to make higher profit within a short term (refers to period more than 1 year and less than 5).
2. Select funds that rank top in earnings within same type
Once selecting the type of funds, one may refer to the information reports (such as website of trust fund management companies) for the performance ranking and choose those high-ranking companies in the same type of funds.
3. How to select Fund Manager
Trust funds are operated by people. Excellent performance of funds reflects the managers' skill of investment at high level. Therefore, when choosing a trust fund, investors should also pay attention to the background of the manager, including experience, previous management performance and time spent in managing the fund. Investors should read the background of the new hire if there is a change in the manager in charge of the fund, despite its excellent performance in the past. On the contrary, investors should not ignore a fund simply because its dull performance in the past but a new manager with good track records takes it over. The fund may well perform in near future.
4. Select Outstanding Fund Management Companies
Outstanding fund management companies offer investors not only with funds with desirable performance but also variety of better service. This is because excellent fund companies, comparatively speaking, rack in more profits that enable them to attract talents by competitive remuneration and to improve the skill level of internal management. If investors want to maintain good relationship with fund management companies, they should consider the background of the managing companies when selecting their funds. In general, the following aspects of fund management companies should be examined:
1） Size of asset under management
2） Overall performance of funds
3） Research capability
4） Image and reputation in the market
5） Service quality offered to investors
6） Background and qualification of senior managers and overall quality of staff members