Trade Mutual Funds
By now we have a basic understanding of a Mutual Fund.
When to invest in Mutual Funds?
However, we would like to mention that take a look at ETFs as it is a much better investment vehicle compared to Mutual Funds using our Strategy.
How to choose Mutual Funds?
Everyone has their own ways of doing this, but most people narrow their search based on following categories:
Other factors in choosing right Mutual Fund -
Many people also consider sales charge, expense ratio, fund investment policy, turnover, etc while selecting right Mutual Funds. No matter what selection criteria anyone uses, create your own list of Mutual Funds and then use Funds Ranking spreadsheet to identify which funds are top runners.
Let's say by now you have come up with your list of selected Mutual Funds based on above factors.
How to choose right list of Mutual Funds for right kind of market!!!
Segregate your list of Mutual Funds based on market direction -
List of MFs for Bull Market - Strong Market or Growth Market
When to invest in Mutual Funds?
- If for any reason you do not want to trade ETFs, considering the fact that ETFs are fairly new
- You are ONLY allowed to trade Mutual funds
- Specific sectors, diversification strategies available via Mutual Funds are not available via ETFs or other choices
- You are comfortable to trade in Mutual Funds ONLY
However, we would like to mention that take a look at ETFs as it is a much better investment vehicle compared to Mutual Funds using our Strategy.
How to choose Mutual Funds?
Everyone has their own ways of doing this, but most people narrow their search based on following categories:
- By Fund Families (very popular)
- By Asset Under Management
- By MorningStar Category
- By Sector
- Top Performers
- No-Load Funds
Other factors in choosing right Mutual Fund -
Many people also consider sales charge, expense ratio, fund investment policy, turnover, etc while selecting right Mutual Funds. No matter what selection criteria anyone uses, create your own list of Mutual Funds and then use Funds Ranking spreadsheet to identify which funds are top runners.
Let's say by now you have come up with your list of selected Mutual Funds based on above factors.
How to choose right list of Mutual Funds for right kind of market!!!
Segregate your list of Mutual Funds based on market direction -
List of MFs for Bull Market - Strong Market or Growth Market
- From our list we exclude all BOND Funds, ETNs, Target Date Funds and all types of Inverse Funds
- We choose ONLY BOND Funds, Inverse Funds
So what do we do with this Mutual Fund list?
Check out "How to use Funds Ranking Sheet" to obtain Mutual Fund ranking. We can simply enter our chosen Mutual Fund Symbols into Funds Ranking Sheet and apply configuration changes.
How to apply our Technique using base strategy:
- Identify the market direction based on our market timing tool or follow our Blog.
- If we get market "entry signal" then we trade best performing Mutual Funds from "List of MFs for Bull Market".
- If we get market "sell signal" then we trade best performing Mutual Funds from "List of MFs for Bear Market".
- Best returns are obtained when you enter a trade after you get entry or exit signal and not midway, if you are midway then best strategy might be to wait till a signal is generated.
Benefits of this technique -
- We remain invested most of the time, in other words our money is always working for us irrespective of market direction
- Bear markets, market corrections or market crashes provides us a way to be invested intelligently and make good gains
- Our losses are minimal but overall cumulative gains over longer periods are substantial
Disadvantage/Risks -
- Transaction fees for trading Mutual Funds can add up but considering our strategy and if entered after appropriate signal, the gains are far more to compensate for our overhead cost.
- Remember, these are Mutual Funds and hence slow moving financial instruments there by providing lower returns as compared to Stocks or ETFs.
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