Think wisely - MF

Traditionally, one divides mutual funds into core funds and supporting funds. Core funds are those that should form the backbone of any equity-leaning mutual fund portfolio. There can be variations, but basically core funds should be conservatively run funds that invest most of their money in large-cap companies, but could invest in any sector or industry as the market conditions justify. Depending on the investor an equity-oriented balanced fund could also be a core fund.

Beyond core funds, there are the specialty funds. These are funds that have some twist in their tail. They have some limitation on where they can invest. These could be limitations of company size, as with small-cap or mid-cap funds or of industry something else. The basic idea is that the fund manager is not free to invest in any company that he or she wants to. There are some limitations imposed by the mandate that the fund has. It should be clear to any thinking investor that there is no great need for funds which come with strings attached.

Not surprisingly, such funds are given to swinging between extremes of performance. When the market was rising, they were rising more than vanilla funds. But when the collapse started, they fell more than them.

Traditionally, one divides mutual funds into core funds and supporting funds. Core funds are those that should form the backbone of any equity-leaning mutual fund portfolio. There can be variations, but basically core funds should be conservatively run funds that invest most of their money in large-cap companies, but could invest in any sector or industry as the market conditions justify. Depending on the investor an equity-oriented balanced fund could also be a core fund.

Beyond core funds, there are the specialty funds. These are funds that have some twist in their tail. They have some limitation on where they can invest. These could be limitations of company size, as with small-cap or mid-cap funds or of industry something else. The basic idea is that the fund manager is not free to invest in any company that he or she wants to. There are some limitations imposed by the mandate that the fund has. It should be clear to any thinking investor that there is no great need for funds which come with strings attached.

Not surprisingly, such funds are given to swinging between extremes of performance. When the market was rising, they were rising more than vanilla funds. But when the collapse started, they fell more than them.

It's a well-established cliché that we should learn from our failures.

So learn from the past failures of you and your friends and start a new begining in the world of investments