What is the typical return of mutual funds?

Question

What yearly rate can you expect in a low return mutual fund? How about a high return mutual fund?

How much can you lose?

What is the worst case scenario of investing in mutual funds (besides the bank closing down and run away)?

Answer 1

As of Today,,according to Yahoo Finance...
The Top 10 mutuals return:

3Month> 23.7% to 36.6%
1 Year> 60.6% to 75.5%
3 Year> 45.9% to 50.6%
5 Year> 37.9% to 47.8%

........................................
Yahoo's Screener returns these results

"All>Down more than 50%>Year to Date"
1 Fund) --85.7%

"All>Down more than 10%>1 Year"
25 Funds--- Range -10.3% to -88.9%

However,,that 88.9 Loss is a sorta exception.
The Next Loser on that list is -34%
#11= -17%
#12= -13%

There are Only 5 showing ,,Down more than 25%

And only 179 showing "Down more than 0% 1yr"
While there's 16,643 "UP more than 0% 1yr"
With 13,433 "UP more than 5% 1yr"
..........9,762 "Up More than 10% 1yr"


So,,of Over 16,500 Funds,,,,
25 are Down More than 10%
vs
9,762 UP more than 10%
6,061 Up more than 15%

From that simple comparrison it seems a safe assumption that a "Dart Thrown" amongst ALL Mutual Funds could be expected to return 10% or better
>>>>>>>>>>>>>>>>>>>>>>>>

"Worst Case"....???
Only 25 of more than 16,000 are Down more than 10% in current 1 yr period AND 3yr period

51 are Down more than 10%,,Y-T-D
561 of 16,600+ are Down More than 0% YTD

That's 30:1 Odds of hitting a Gainer larger than +0%,,,
on nothing but a Blind Grab.
A LITTLE research can be expected to better those Odds exponentially,,in my opinion.

Ok,,we all are familiar with the saying,
"Past Performance is No Gaurantee of Future Results".
EZ enough to understand that.

Yet on the Other hand,,according to both Market Logic and Common Logic it's a valid Assumption that
"IF the Fundamentals Underlying a Fund's Performance remain basically IN TACT & In Effect,,,,,
The Fund's Performance Model will be approximately replicated."

Put Another way,,,If most all things remain equal about the Fund,
It's Reasonable to expect the Fund to perform in a Similar manner.

It Might have done +20% last year,,,if things stay Similar,,
One could reasonably expect a +10 to 20 % range as a basic assumption.
A Drop from +20% to +10% is a HUGE Correction Factor to include in any assumption of "all things remain equal"--the basic fundamentals being maintained.

Lets apply that to a couple of examples:
Gold and Oil both have about TRIPLED in last 3~4 Years.
Obviously,, Funds weighted in Those Now Reflect That RISE.
Actually,,they reflect Commodity Pricing + Actual Enterprise Value +++INVESTOR SENTIMENT>>Momentum.

But can Anyone in their right mind think that Gold or Oil will TRIPLE AGAIN in next 3 yrs or so?
200$ to 600$~700 Gold,,,,OK,,,but $650 Gold to $1,950?
$20 Oil to $60's,,Sure,,but From HERE Forward..$60's to $180's??
Within next 3~4 years??
Naaa,,No Way.

So we CANNOT Logically assume Gold or Oil will "repeat" the Performance of it's current 3yr and 5Yr record.
It can CERTAINLY Do Very Well,,,but it's Recent Performance is an Anomaly,,,a Unique Situation.
AND,,it was (arguably/Probably) coming from a UNDER-valued position----it had a Latent/Dormant UNrealized Value which accounts for a substantial %% of it's Upward Move.


Now lets look at DEFENSE SECTOR for a example contrary to Above.
Defense itself had a Windfall UP-Move.
We CANNOT (Or at least HOPE NOT) expect the
MOTIVES/MKT- Forces to REPEAT.

But even so,,,the Fundamentals of The COMMERCE of Warfare/Defense remain Intact,,,and are expected to do so thru next several years.
The DEMAND for relative Products/Services is not only Still Growing,,it's EVOLVING.
"The Big Picture" of DEFENSE is one of GROWTH.
Which means Growing Sales/Revenues/Profits,,,it means Innovation,,,it means Mergers & Consolidations..
Blah,Blah....

So if we Compare something like Gold & Oil & Defense we can see some Similarities And some Distinctions.
*All 3 came from Steady Baseline Levels,,And Undervalued.
*Gold & Oil ROSE due to Rises in COMMODITY PRICING,,,
far,far more than sheer COMMERCE GROWTH.
*Defense ROSE due to Increases in BUSINESS VOLUME

Nothing is going to Change for Gold & Oil in terms of GROWTH,,it will settle at levels/rates more in line with statistical appreciation.

DEFENSE,,,,we haven't scratched the surface.
"Homeland Security" has been Not "Back Burned",,,but practically taken Off the stove.
Economic Focus remains Largely on Military & Warfare Effort.
Contracts are going to MegaUltra NewAge Weaponry,,,and routine logistical supplies for active troops.

The GROWTH potential that lies ahead,,,and it's Inevitable,,
is in Homeland Infrastructure Security.
Schools,Hospitals,Municipal Buildings,Churches.
Transportation Infrastructure remain practically NAKED.
Energy,Communications,Municipal Utilities Infrastructure IS Naked.

Looking at 3 & 5 Yr History of those 3 Sectors,,we see they all started out very similar,,,and advanced similar on similar reasons.
But looking FORWARD--we can assume more actual GROWTH Potential in Defense/Security.

Which doesn't Prove anything,,let alone Gaurantee anything.

But when looking forward thru next 1~2~3 years,,,it makes for a pretty good Hunch about Which Direction to throw that Dart hoping to hit a winner.

Home Builders,,,are done for now---the residential real estate cycle is waning.
Commercial Real Estate and REITS are still before Their peak according to traditional stagger/overlap.

Russian/Eastern Euro Funds,,,,very similar to Gold/Oil actions.
vs,
China,Mexico,S.America,,,more like Defense Sector scenario.

Materials,Metals....US Companies are peaked,the Bulk of their recent rise is done.

Genetics,,,it's a coin toss
Drugs/Healthcare,,always a coin toss.
But they're not feast or famine.
For these it's a matter of Speed & Size of gains,,,
and not Direction so much---they are typically relentless Advancers overall.

Utilities,Transports,,,they'll rise long-term.
Population Growth makes for a supporting motive for BIZ Growth.
The "catch" is how the equities compare to broad mkt,inflation,etc.
Folks will move Away from the traditional Steady stuff and into things yielding faster action/higher gains

It's Possible to look at each Fund's investment Criteria,,,and consider that from perspective of :
*what are recent Motives for Fund's performance?
*what is CURRENT state of those forces/motives?
*what is approx Outlook for those things?

It's Not any Gaurantee,,but neither is it that difficult to form some rational,realistic conclusions about Future Performance probabilities.

Introduce some kind of "correction facture",,,best to be Conservative....
And a +20%~25% Fund with Persisting In-Effect & Intact Fundamentals can be assumed to Repeat "Half That",,,+10~12~15% as a responsible expectation.

If something CHANGES for the worse,,or the fund simply doesn't perform,,
Just Switch Out into something else.

If it does BETTER than expected,,,,well,,we can all live with being "wrong" like that :)

By the same Token,,,if it happens to begin to OUTPERFORM,,
then That demands further research to validate any new or improved motives/fundamentals.

If such validation cannot be made,,,,that's an indication of possible OverHeating.
Begin to consider dancing closer to the door.
Meaning,,,anticipate Selling to lock-in profits if it begins to Exceed expectations by any unrealistic or unexplainable amount.

>>>>>>>>>>>>>>>>>>>>>>>
Myself,,I'm personally not a big fan of Mutual Funds.

Some of the Investment Dollar goes to "buy" things I do not need,,such as Service rather than only Equity.

For Some People,,,such expenses are WELL WORTH the costs.
They DO get their Money's Worth for the service of Pro Management.

I prefer to use a more active hands-on approach.
Example: a variety of CLOSED FUNDS,ETF's etc in a portfolio to comprise a sorta "Pseudo Mutual Fund"
(Sounds more sophisticated than to frankly say "Shade-Tree Home-Brewed",,,lol)

It's Cheaper and Easier to occasionally adjust exposures.
Each one can have it's Own individual Stop Loss limits.
Example--If ,,,Brazil gets Weak,,I'm OUTA Brazil and IN CASH,,,without liquidating positions in any other exposures.
I can even DayTrade/ShortTerm trade the individuals.

Or adjust the FakeFund monthly,,Quarterly,,whatever.
Faster to Respond to EVENTS/NEWS to both Profit And to Mitigate Risks.
Cheaper/Easier to adjust portfolio to capture Seasonal/Cyclical trends & changes.

I can Nurse it,or Babysit it,,or Churn it,,or just leave it alone with Limit Orders in place while I turn my back on it.

TUFF to get In/Out of a actual Mutual Fund in SECONDS for total cost of $5 or $10.

And the Closed Funds,Etfs still offer a substantial degree of diversification within their investment area/criteria,,
and they have Pro Management.

It's NOT for everyone,,,,nothing is Ideal/Optimum for EVERY person.

And it's Contrary to the idea of Mutual Funds offering Investors a Hands-OFF freedom.

But the little bit of management effort & personal involvement works better for me.

I suggest NO ONE Try that at home,,without Modelling it at least 2 financial quarters,,being very conservative in their activity,and brutally Honest with themselves about How/What they actually INTEND to "manage" the thing.

It's an invalid excercise to come home everynight and plan daytrades On Paper amongst one's homemade Mutual Fund components.
Even if the equity you woulda "bought on paper" runs wild a few days.

Even if a person Actually DID execute such trades for real,,
That just puts them back to being an Active Trader,,,and Not an Investor.

And it impedes development of Skills,Experience,and Instincts necessary for an INVESTOR to make reasonably accurate 3~6~12 month projections.

Just my opinion,,for what it's worth.


What Ever you do.....
Spend some TIME before you spend your Money,,
Opportunity abounds everyday,,,no need to hurry,,You wont miss anything by educating Yourself,,and trying your New Knowledge
"ON PAPER" first.

And NEVER Go IN without an EXIT Plan.
That's perhaps the MOST Critical discipline to develop.
Investing is what separates Confidence from Hope most clearly.

Unlike playing the Lotto or any number of Get-Rich-Quick schemes,,,
"How much You Lose" in stocks/mutual funds is largely up to the Investor.
Damage Control is a learnable skill.
You'll get plenty practice,,it's up to You to learn the lessons well.

Answer 2

Typical Mutual Fund Return

Answer 3

This Site Might Help You.

RE:
What is the typical return of mutual funds?
What yearly rate can you expect in a low return mutual fund? How about a high return mutual fund?

How much can you lose?

What is the worst case scenario of investing in mutual funds (besides the bank closing down and run away)?

Answer 4

1

Answer 5

With the market down, there is a good possibility you can double or triple your money in only a couple years. There are several strong companies with plenty of cash that are down in price right now. You can get some ideas from an advisor, free at Fidelity, Vandgard and most other brokerage firms. Otherwise, you could get a "managed" account, but unless you are totally clueless I'd save the management fee and buy yourself. Most just turn the money over to Mutual fund managers and then charge you an annual fee. I'd look for stocks that pay a dividend too. With prices down, many pay more than CDs. (ie. Verizon 6.8%, NLY 18%, Altria Group 6.6%, Merck 5%) if you like mutual funds, Morningstar rates all of them as to risk & performance.

Answer 6

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Answer 7

I would expect a low return mutual fund (typically one that contains blue chip companies) to return no more than 5% on an annualized basis.

Higher risk, potentially high return mutual funds can return in excess of 30% on an annualized basis.

If you can, I would recommend diversifying your investments into stable, low return mutual funds and high risk mutual funds. In the end, you'll find a good balance and a possible consistent return of around 5-10%.

The worst case scenario of a mutual fund is all of the companies in the mutual fund would fold or go bankrupt, which is highly unlikely. I would recomment researching mutual funds on the MotleyFool.com or Morningstar.com

Answer 8

I don't know specific numbers, but the returns are lower than the stock market. This is bc the mutual fund managers and employees all have to get paid, which cuts into your earnings. Bc this makes them less attractive, they pay advisers to recommend them, further cutting into your earnings. Buying mutual funds adds a middleman, buy stocks, it's much more direct.

Answer 9

This question is impossible to answer.

I say this because there are now over 10,000 mutual funds, representing hundreds of styles of investing.

According to Standard & Poors, there are funds that are down 30% ytd and fund that are up over 100% ytd. The variance between funds is staggering.

If you want to learn more, then go to:

http://www.advancedwealthsolutions.com

Good luck!

Answer 10

There is no typical return for a mutual fund because there are so many different types of mutual funds. There are mutual funds that invest in the money market, funds that invest in government bonds, funds that invest in junk bonds, funds that invest in growth stocks, funds that invest in small cap stocks, funds that invest in value stocks, even funds that invest in just internet stocks. Perhaps some specific examples will help you visualize better the relm of mutual funds.

Chase Growth Fund a top ranked growth fund has a 5 year annual return of 7%. It lost 13% in both 2001 and 2002.

Delaware Extended Duration Bond Fund a top ranked bond fund has a 5 year annual return of 9.26%. I lost 5.5% in 1999.

Answer 11

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