What are the best performing mutual funds

Knowing what the best performing mutual funds 2013 are will help you to design and build a bespoke fund portfolio that will have the potential for growth and income as well as standing the test of time.

Many new investors get carried away and only buy the best performing funds; they may profit in the short term however they are likely to lose money especially if their risk tolerance has not been considered.

The key to picking the best performing mutual funds is to pick from a select group of funds which have been screened and only contains the highest quality funds.

Highest Performing Mutual Fund

In the list below I have included the top 20 rated mutual funds, all these funds have been screened so that they have a proven track record of performing well during bull and bear markets.

The portfolio would have returned 13% if you had invested a year ago at the time of writing this article. All these funds have been screened so that they all have a 5 star rating from FE Crown Ratings and a low FE Risk Score. Essentially this is a list of the highest performing mutual funds cross referenced with the high quality mutual funds.

Best Performing Tips Mutual Funds

There is no doubt that you’ll be able to find a portfolio which has a better return than 13% however the reason that I have chosen this particular portfolio is because these funds have been screened using FE Crown Ratings, for a fund to get five FE Crown Ratings it must have superior stock picking methods, effective risk management and excellent past performance as well as outperforming the index during bull and bear markets. By choosing from this list you’ll be much safer during sharp market declines.

Another key factor in designing and building a bespoke mutual fund portfolio is risk management. If several mutual fund portfolios which are diversified are all returning 13% then you need to analyze the risk associated with each portfolio, the portfolio which has the least risk is the best option as you’re getting the same return for less risk.

The measure for risk is volatility along with the Greek indicators such as Alpha, Beta, Gamma as well as the Sharpe Ratio. The FE Risk Score takes all these factors into consideration and then gives the entire portfolio a combined score.

The FE Risk Score usually ranges between 0 to 150 for mutual funds and the lower the risk the better the portfolio will handle sharp falls in the market, the portfolio below has a FE risk score of 80 which makes it a very safe portfolio to invest in.

Managing Top Rated Mutual Fund Companies

Money management is very important when it comes to designing and building a bespoke mutual fund portfolio; if you’re funds have been screened well then there is little need to manage the fund. Effective money management involves having contingency plans to keep the portfolio on the right course. Some of the key questions that you need to ask yourself when putting in place effective money management procedures are as follows:

1. What will you do with the income? Will it be reinvested?
2. What will you do if the portfolio rises 10%, 20%, 30%? How can you lock in the value?
3. What will you do if the portfolio falls 10%, 20%, or even 30%?

By having answers to these tough questions you’ll be in a position to handle anything the market throws at you and make rational decisions as opposed to emotional decisions which usually lead to losses. Many investors lose money because they don’t have effective money management plans in place and start to panic instead of rationalizing.

Even though the portfolio below is the top rated best performing funds of this year it still makes sense to have an effective hedging strategy in place. The value of your portfolio could go up as well as down, when the stock market is in decline or in a bear market and effective hedging strategy could offset and mitigate your losses. If you’ve created a portfolio that reacts very closely to one of the stock market index you can use that particular index option to hedge the portfolio, if you think that a sharp decline is due then you could buy a put option on the index, when the market does fall your portfolio will fall however the index put will rise in value to mitigate the losses. If you can predict every time a major decline is coming you can protect your portfolio from market shocks.

Unfortunately once you’ve created your portfolio you can’t just leave it to one side and continue pumping money into it, over time many financial factors may undermine a particular fund. If a particular fund no longer holds the five star FE Crown Ratings you need an exit strategy to get out of the fund at a reasonable price, you need to then replace the fund with another fund from the same sector with five FE Crown Ratings; this will ensure that your portfolio remains diversified and quality parameters have been met. Rebalancing your portfolio every 6 months to a year will help to keep your mutual fund portfolio in good shape.

What are the Best Performing Mutual Funds?

There are many companies that offer mutual funds; these companies include First State, Cazanove, Liontrust, AXA Framlington, Vanguard, Black Rock, Merrill Lynch and Barclays. The portfolio below has a good mixture of high quality mutual fund companies and the contents are well diversified. If you’re looking for top rated high performing mutual funds then these are some of the funds that you can pick from, if your daunted at the prospect of owning 20 mutual funds you can start of by investing in a few and then as you become more knowledgeable and experienced you can build on your portfolio.

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