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| Mutual Fund News and Analysis
Bond funds set new pace When the stock market was booming in the late 1990s, many small investors regarded bond funds as something only for the ultra-cautious - retirees, 50-something couples planning for their golden years. The market of late has shown that this concept might not be true. Bonds outpaced many stocks between mid-2000 to mid-2001, and taxable bond funds outperformed the Standard & Poor's 500 Index by a solid 24 percent over this 12-month period, according to fund-tracking firm Morningstar. All of a sudden, people are starting to listen to the pundits who have argued for years that everyone should have at least some exposure to bonds in their investment portfolios. Finding the right funds for you Mutual funds are a mixed bag -- what's right for one person may not be right for another. Knowing something about the funds and yourself helps narrow the choices. With well over 10,000 mutual funds in the U.S. alone, choosing the ones that best meet your needs might seem a little like finding a needle in a haystack. Knowing a few key bits of information immediately narrows your choices to a more manageable number of options. Fund investors: smarten up Here's a surprise: Most investors aren't as smart as they think they are. We're constantly reminded that past performance doesn't predict future results, but we still chase the hot stocks and funds. We know trading adds costs and has tax implications, but we like to trade and convince ourselves we're better off for it. We know we should take expenses into account when choosing mutual funds, but we still buy expensive funds. Most of us say we invest for the long term, but the turnover in our accounts shows a short- or medium-term outlook. Global sector funds not as risky as name implies SAN FRANCISCO – Think of the riskiest categories of stocks over the past few years, and the words "technology" and "international" are likely to be among the first that cross your mind. If you combine the two -- international technology stocks -- you get something akin to running with the bulls in Pamplona, right? Wrong! As counter-intuitive as it may sound, global sector mutual funds can actually be less volatile than U.S. sector funds, and adding them to a portfolio that is dominated by large-cap U.S. stocks is a good way to reduce some of your overall portfolio risk.
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