How do I decide which mutual fund to buy?

With 12,913 mutual funds in Canada, this can seem like a daunting task and there are many aspects of a mutual fund that you should consider.  First, determine what the mutual fund’s job is to be within the context of your investment portfolio and as described within your portfolio’s Investment Policy Statement (IPS). Once you have identified the mutual fund’s job, it will be easier to narrow your options by eliminating those mutual funds that do not qualify.

Example:  If the mutual fund is to form part of your Growth investments, then you can eliminate all of the Fixed Income, Money Market and Balanced mutual fund categories. If you have further defined the mutual fund’s job as to provide a steady investment income, in addition to Growth for your portfolio, then you can further eliminate most Specialty and Emerging Market funds.

In the example above, you have narrowed the selection to Growth oriented mutual funds that pay a constant and reliable annual income and invest in large, well-capitalized companies.

By using such a simple, focused process, you have now refined the potential mutual fund options from the overwhelming 12,913 down to only 356 options, according to the GlobeFund mutual fund search process. (See the attached link @  https://www.theglobeandmail.com/globe-investor/funds-and-etfs/fund-lookup/)

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