The Retirement Corporation of America

Measuring Your Funds' Performance

You pick a mutual fund because you want to accomplish whatever the fund is designed to accomplish. That could be:

•  The fastest growth of your money possible—with an aggressive growth or small-cap growth fund.

•  Reasonable growth of your money with some added measure of security—with a large-cap growth fund.

•  An extra measure of growth for your money because the fund takes a value approach—concentrating on finding winning stocks before most investors find them.

•  A blend of growth and income—with a growth-and-income or equity-income fund.

•  Income with little or no growth expected—with an income or a bond fund.

All you can reasonably expect from a fund is that it does what it was designed to do. You can't expect safety as the primary goal of a small-cap growth fund. You can't expect super-fast growth from an income fund.

You get what you pay for. You keep tabs on performance to make sure you are getting what you pay for.

How often should you measure performance?

•  Before you buy, you want to see performance figures for the past three years if they are available. Less time than that, and the fund hasn't had time to build a measurable track record. More time than that, and you begin to go back to when market conditions were different.

•  Once you own the fund, you should track performance quarterly with a thorough review done once a year. A quarterly update is often enough to make sure performance is on target—that you are getting what you paid for—but not so often that fund-watching becomes a burden.