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Stay ahead of the pack

When shopping for a mutual fund, be finicky. Investigate the fund’s management history, keeping in mind that the fewer the changes in leadership, the better. Also ask about expenses. A sales charge, or load, in addition to other fund expenses, can add up and hurt total returns. Though past performance does not guarantee future results, researching a fund’s performance is an important consideration. One method for measuring a mutual fund’s success is to compare it to other funds with the same objective. Ranking companies, such as Morningstar, Inc. and Lipper Analytical Services, can also help you evaluate a mutual fund’s performance. As trusted authorities on mutual funds, these two companies rank funds with the same objective. When choosing a mutual fund, ask for its Morningstar and Lipper rankings, and compare its long-term performance to the appropriate benchmark, also called an index.

Watch your step

An index, or a benchmark, is a great way for an investor to measure the long-term performance of a mutual fund. Scan the financial papers or popular financial Internet sites, and you’ll find dozens of indexes measuring the stock and bond markets. Many are useful benchmarks for comparing performances of individual funds.

Benchmarking the Benchmarks


Past performance does not guarantee future results. © Ariel Investments, LLC. The mutual funds offered by Ariel Investment Trust are distributed by Ariel Distributors, LLC. Use of this website is subject to our Terms & Conditions of use. Each of the investment products, mutual funds or services referred to in this site may be offered only to persons in the United States. This web site should not be considered a solicitation or offering of any investment products, funds or services to investors outside the United States. Original illustrations © Omar Rayyan 2007.

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