Hold on. Am I recommending that you buy the funds with the best 2006 performance? No, but in the spirit of comprehensive financial planning, you will need to examine the risks and rewards of these vehicles to see if they can fit into your holdings. Let's take Janus Overseas Fund as a case in point. While 2006 was easily its best year since 1999- returning 47% - the fund has had some tough times. The good news: It's ranked in the top 1 % of similar funds over the past three years. Yet 2000 through 2002 was an ugly period, when it lost money every year with annual losses of at least 23%.
How do you know if you are buying into Janus' fabulous run of me past four years or the 2000-2002 train wreck?
You don't, yet many investors believe high returns will continue even after a year of price declines. They hold on, hoping me fund manager will get his hot hand back. Sounds like a casino strategy, doesn't it?
Although less than two months of returns should be no barometer for the rest of 2007, the fund bas risen more than 4% this year, beating almost three-quarters of its 'peers as of February 16.
How do you know if you are buying into Janus' fabulous run of me past four years or the 2000-2002 train wreck?
You don't, yet many investors believe high returns will continue even after a year of price declines. They hold on, hoping me fund manager will get his hot hand back. Sounds like a casino strategy, doesn't it?
Although less than two months of returns should be no barometer for the rest of 2007, the fund bas risen more than 4% this year, beating almost three-quarters of its 'peers as of February 16.
No comments:
Post a Comment