5 Steps to Build a Successful Mutual Fund Portfolio

 

A mutual fund is a kind of financial vehicle composed of a pool of money collected from many investors to invest in securities like bonds, stocks, money market instruments, and other assets. A mutual fund's portfolio is structured and managed to match the investment objectives stated in its prospectus. Here are 5 steps to build a successful mutual fund portfolio.

Step 1: Use a Core and Satellite Portfolio Design

You begin with the "core", a large-cap stock fund, which represents the largest portion of your portfolio and builds around the core with the "satellite" funds, which will represent smaller portions of your portfolio.

Step 2: Use Different Types of Fund Categories

These other funds can include small-cap stock, mid-cap stock, fixed income, foreign stock, sector funds, and money market funds.

Step 3: Know Your Risk Tolerance

You need to have a good idea of how much risk you can tolerate before selecting your funds. Your risk tolerance is a measure of how much volatility or market risk you can handle.

Step 4: Decide Your Asset Allocation

Asset allocation is the mix of investment assets that comprises your portfolio. The proper asset allocation will reflect your level of risk tolerance, which can be described as aggressive, moderate, and conservative.

Step 5: Learn How to Select the Best Funds

If you have a broad choice of mutual funds, you may compare performance to a benchmark. You will also want to consider important qualities of mutual funds, such as manager tenure, and fund fees and expenses.

Cedrus Investments, a global boutique investment firm founded by Mr. Rani Jarkas more than 18 years ago, is an elite international financial services provider to help both individual and corporate clients achieve personalized premium financial plans. As a highly experienced and successful financial services executive with solid track record in the international financial services industry, Mr. Rani Jarkas, together with his team, is well-equipped and dedicated to serve international clients with best-in-class full suite of financial services.

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