As you may have seen in The Financial Woman Resource section one of my favorite financial publications is Forbes magazine. They produce a Best Buy list for mutual funds (click here to open the list for domestic stock funds) annually that helps an investor narrow down this enormous field. The survey offers several features that allow an investor to make a quick assessment.
One of the most important attributes of investing wisely is to avoid chasing previous winners and market sectors as this can easily lead to getting into a fund at the top. The Forbes survey assigns a rating from A to F indicating how a fund performed during a bear market and a bull market. This helps investors discern which fund managers perform well during both types of markets. For example notice that Bruce Fund earned an A in up markets and an A+ in down markets while the survey shows that Gabelli ABC Fund-AAA earned an F in up markets and an A+ in down markets. An investor may then reason that it may be best to look for a fund that performs well during bear markets following several years of bull markets and vice versa.
Investors are choosing ETF’s (exchange traded funds) and index funds over actively managed funds such as those in this table more and more. Nevertheless there are still active managers that beat the performance of the overall markets. The Forbes mutual fund Best Buy list helps easily decipher which ones have done so in the past.