Morningstar Guide to Mutual Funds
Chapter One
Know What Your Fund Owns
Most of us wouldn't buy a new home just because it looked good from the
outside. We would do a thorough walk-through first. We'd examine the furnace,
check for a leaky roof, and look for cracks in the foundation.
Mutual fund investing requires the same careful investigation. You need to
give a fund more than a surface-level once-over before investing in it. Knowing
that the fund has been a good performer in the past isn't enough to
warrant risking your money. You need to understand what's inside its
portfolio-or how it invests. You must find out what a fund owns to know if it's
right for you.
The stocks and bonds in a fund's portfolio are so important that Morningstar
analysts spend a lot of their time on the subject; news about what
high-profile fund managers are buying is a constant source of e-mail chatter
in the office. Our analysts examine fund portfolios of stocks or bonds, talk
with the managers about their strategies in picking those holdings, and check ... read full excerpt from Morningstar Guide to Mutual Funds: Five-Star Strategies for Success, 2nd Edition ebook
