Fees and expenses can be a drain on all types of funds. Fees are generally taken from the fund s earnings, which reduce the total return provided to shareholders. Taxes are a factor when investing in retail mutual funds, but because the Annuity Board s plans are tax-deferred, it s not a consideration for evaluating your funds. However, don t forget, unless taken as a minister s housing allowance, taxes are due when you withdraw the money during or upon retirement. Evaluating performance A fund s long-term historical returns are useful for comparing it against an appropriate index or benchmark over the same time period.
Indexes represent the average performance of all securities in their particular focus area.
You cannot invest directly in an index. By looking at the extent to which a fund falls short of, or exceeds its designated benchmark over time, you can gauge how effective it has been in meeting its objectives and how it has performed relative to its peer group. It s important to compare apples to apples. For example, the Dow Jones Industrial Average is cited in the news daily, but it is generally not an appropriate measuring stick for the majority of investment funds because it only focuses on 30 large industrial stocks. In addition, indexes have management fees associated with them.