small, mid, large caps........looking at mutual funds, how does the cap size affect my decision?

Question

im looking at er's, manager tenures, performance, risk, holdings, ......does the cap size reduce risk, in that a large cap has a longer track record and therefore is a better/more reliable investment?

Answer 1

manager tenures are important for the more successful ones like Bill Nygren at Oakmark get favorable reviwes in places liek morningstar (and deservingly so) performance look as far back as you can 5-10 year range and go from there. Cap size DOES reduce risk for the large cap sector is well established companies and can withstand periodicall losses in teh market. Small caps are generally younger companies and they will be hurt if the market suddenly tanks. Large cap doesn't have a better track record per say buy large cap would be something like Boeing and a small cap would be NTE big differences between the two. The more risk the more potetional for reward could happen. Barons does a review on mutual fund managers and they are very worthy a look (with Bill I even invested in his funds before moving to ETF's)

Answer 2

Cap size refers to the capitilization of a company, which is the total value of all outstanding stock for that company. Larger companies will tend to have a lower average return but will have lower volatility. You can expect a small cap fund to return more long term, but you'll have to expect more volatility as well.

In my opinion, it is difficult for funds to consitently outperform the market. Therefore, it is better to look for small expense ratios, as you'll be able to keep more of your return. I would recommend Vanguard as they have consistently had very low expense ratios and they are one of the most respected fund companies in this regard.

Another option would be looking at puchasing ETF's (exchange traded funds), as these typically have lower expense fees and fewer taxes (due to less trading that needs to be done to manage the fund). If you want to buy these, you could do so with an online discount brokerage, such as etrade.com, sharebuilder.com, or scottrade.com.

Answer 3

great cap money are those that have a substantial composition of their fairness portfolio skewed in the direction of great cap section. by skill of the very nature of them being “great caps” they're often protective however the prospect element in such money is predicated upon the inventory determination attitude of each fund supervisor or perhaps nonetheless the marketplace threat. So, specific there is a few area of threat!

Answer 4

"Asset Allocation".....

Learn it. Understand it. Invest your money by its rules.
At any give time one "asset class" will do better than others. You'll never know when that'll be. So..... learn and understand "Asset Allocation" before you do anything else!

READ...... READ.... READ....

Consider where you're asking for investment advise. Total strangers. Be very careful.