Letters
Comments Posted On-Line to “Nine Timeless Rules for Investing in Mutual Funds [and ETFs],” by John Markese, November 2009 AAII Journal.
I concur with John Markese’s rules and would add the following for your review.
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Rule #1 addition: The fund manager and his term as fund manager is usually the only period that one should use to evaluate the fund’s past performance, risk, etc. (If the fund manager has only three years running a fund, do not look at five years or more of data on performance, risk, etc.)
Rule #2 addition: In my view, much more should be evaluated in the risk section than ‘variation risk.’ There is also ‘bear market risk’—how much did the fund fall in the last bear market compared to its peers, its benchmark, and other funds you may be considering to replace it? (This one measure drops out 90%-plus of the funds I consider! Nothing like a bear market to separate the ‘men from the boys.’)
Chris Ness
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