You can t just focus on absolute performance because market factors such as interest rate changes or currency exchange rates will affect all funds operating in a particular segment of the market. A fund that can outperform similarly managed funds over a time period long enough to encompass a broad range of market environments deserves a careful look. Categorization of funds, however, is not precise and the categories are broad enough to include funds with unique approaches and significant differences in risk profiles. The emphasis is on consistent, exceptional long-term relative performance. But examining a mutual fund s historical record in the context of peer group comparisons is likely to be more productive than not.
Some categories have several funds, while other categories have few and still others have none.
It s The Difference That Counts Funds that make any list of consistent winners warrant additional analysis. The abbreviations following the name of the funds in the listings provide a little more insight into the character of the fund investments for instance, if it is a sector fund or emphasizes small capitalization stocks, and if it invests overseas. Flexibility in seeking domestic or foreign investment has value, but it also makes funds more difficult to understand and to integrate into an individual investor s overall portfolio without redundancies in the international portion of the portfolio. In addition, the successful aggressive growth stock funds all have the ability to invest in foreign markets. Compared to the average of all aggressive growth funds, the performances of these funds is impressive.