Each month in this column, we ask an advisor about the mutual funds he or she would consider for a simplified client scenario. Here's this month's scenario:
Clients (married couple) are in their mid-thirties with $50,000 available to invest, seeking long-term growth and willing to accept substantial volatility. Their insurance needs are covered, they have no problems with excess debt or spending, and their retirement accounts are funded for the year.
What research tools do you use to identify prospective funds for clients?
Most of the tools that we utilize are tools that are readily available to most of the public to collect information: the Wall Street Journal, Barron's, Fortune, Forbes, CNBC, Yahoo Finance.
Then we'll utilize some more sophisticated tools that we purchase on an institutional level like Morningstar.
We also do our own due diligence by going directly to a fund's website, examining the major holders and holdings of the fund, and we almost always have direct discussions with fund managers before making a purchase.
What specific fund categories would you recommend for the scenario-clients' consideration and why?
One thing that I find interesting is that there is a mainstream notion that the younger you are and the longer the time horizon you have, you should quite naturally be accepting substantial volatility or substantial risk.
My thought process would take that in a different direction and suggest a greater focus on some risk management inside of a portfolio, even for someone who is young,
