If a mutual fund is well managed ultimately it will show in it’s profits. So I guess the best way to tell if a mutual fund is well managed is to look at it’s profits, especially in comparison to similar funds which are available. If it is paying out good dividends on a regular basis and doing well overall then things should be alright. However, there can be many tricks and underhanded goings on which may take time to come to light. Mutual funds can seem to be doing well and then suddenly be in danger of collapse. If the mutual fund collapses it could spell disaster for all of its investors.
When you consider how much hard work that you may have to do to earn some spare cash to invest, and also how long this may take to do, surely it is obvious that it will pay you to research any potential investments well, before you part with any money. Read as much as you can about a mutual fund that you may have an interest in. Look out for details of all charges and expenses, especially the less obvious and less publicised ones, and see if they are realistic. Regularly read unbiased articles about the companies you are interested in and ask independent advisers. Researching the Internet can often provide you with the type of vital information that you are looking for. Remember to check out the personnel involved and not just the companies. After all, you want to know that your fund is being managed by competent and honest individuals, don’t you?
It will probably also pay you to investigate a little of the fund’s history and how long it has been established. This should also give you some idea about the fund’s previous performance and it’s stability. Try to see how the market is doing in general and look at the results of similar funds. If the market is buoyant, and other funds are doing well, then yours should be in a similar position also. If it is not then something is wrong. Look at as many statistics as possible and try to get a good overall picture of the market.
Overall though, check out as much about a mutual fund as is possible. Once you know it is being managed well, hopefully you can sit back and watch the money flow in.