Table of Contents
What is a Mutual Fund / Portfolio?
A mutual fund is a collection of investments. An investor can purchase part of a mutual fund and own part of each investment in that mutual fund. Investors buy mutual funds for many reasons. Here are the two main reasons:
• It is more expensive to buy the individual investments in a mutual fund.
• Mutual funds are run by expert managers who can achieve higher returns than amateur investors.
How does WikiWealth Improve Mutual Fund Research?
Traditional research reports for mutual funds focus on the tenure of the management team and the past results, but those variables don't affect the performance of a mutual fund. WikiWealth developed a new technique to make accurate investment decisions by looking at the individual investments that comprise the fund.
Mutual funds are a combination of the stocks and bonds that form the fund. When each individual stock changes in price, the whole fund changes in price; therefore, an analyst must research each investments in order to understand the potential of the fund. If the average investment was rating a buy, then the fund is also a buy. WikiWealth has research for over 3,000 companies. We use a weighted average of the individual company potentials to determine the fair value of each mutual fund.
Why doesn't WikiWealth Show the Mutual Fund Price?
The mutual fund price is irrelevant. If a fund has undervalued investments, it will increase in value. It is that simple.
How does a Mutual Fund Increase Diversity?
When a mutual fund manager purchases different investments, the diversity of the mutual fund increases. The more different each investment, the more diversified the fund. Diversity is good, because it lowers the mutual funds risk, as measured by volatility.
Why does Mutual Fund Research Need to Improve?
The majority of fund research tries to predict future performance by looking at past results, but industry evidence suggests that this is impossible. Most fund managers fall short of the S&P 500 benchmark over a long time period. Modern-day fund research is like flipping a coin. The more times the coin reads head, the more often industry fund research will predict heads for the next flip. This doesn’t make sense, because the next flip has a much greater chance of landing on tails. When research predicts future performance using past results, those predictions are likely to be incorrect.
How Does WikiWealth’s Mutual Fund Research Make Investing Easier?
WikiWealth’s gives an investment potential rating to each mutual fund. This rating measures the potential of the mutual fund to increase or decrease in value. It also gives an easy to understand rating system that investors can use to predict the relative performance of each fund over the short term and long term.