Think before buying a fund

Whether you invest in your first or twelve mutual funds, you can have as many as you want. It is very tempting and easy to buy a magazine or visit the website to find out which fund you should invest in. Or simply choose a fund that is led today in general performance, as well as a fund with the highest rating from reputable companies.

However, these procedures are not the best way to find the optimal portfolio of funds that will be best suited to meet your investment objectives and that will match your investment profile. There is a little more effort required for that. And if your investments are in any way, for the first choice of mutual fund it is necessary to think about the following five areas:

1. Vkonnost fund

Many people would say that a fund valuing its assets by 20% a year over the last five years is better than a fund, its vkonnost reached 18% ron in the same period. This is sometimes the case, but not always. The fund, which in the past earned 18%, could outperform its competitors by five percentage points, while a fund with a 20% appreciation could outperform its competitors.

In order to assess whether a fund has really succeeded, you must not assess its performance alone, but in context. Compare its performance with psluns benchmarks (reference levels for comparative performance), such as indices or other funds investing in the same type cennch papr. The word of the same is very important here. It is not possible to compare the performance of an equity fund with a bond fund that has been achieving their long-term return at the cost of a significant risk.

2. Fund risk

Risk is always an integral part of investment. You need to realize that some funds are risky (their returns fluctuate) not others. In general, there is a potential return on investment, so there is a possibility of loss. Investors, who then take on the risk, also benefit from the profits from their investments, although of course they do not always achieve these profits.

Other investors are willing to give up the possibility of high profits and as compensation for this their course, of course, less risk. It is therefore necessary to adjust the return of the fund by its risk, orvolatilitou) vnos. If you encounter two funds showing the same return, it is better to choose the one whose return fluctuates less (see table).



Risk (Volatility)



11 %

4 %



11 %

15 %


If you want to sell the fund all of a sudden (if you need cash suddenly), it can happen that fund B will be on the day of its performance and you may even suffer a loss. If fund A is on dn, the probability of a loss due to ni volatility is much less.

3. Fund portfolio

It is important to know how to buy the type of valuable manaei fund. Only then can you responsibly expect what to do for your fund and to what extent it will be able to fulfill the hope that you put into it. So you can expect that the bond fund will stably earn over 10% of the year. However, such an equity fund is not so unrealistic.

Do not rely on the fact that the name of the fund reveals how the securities own the fund. ISS Sporoinvest is the largest money market fund in the Czech Republic, after all

Funds: fees and taxes, how to n. Test your knowledge HERE

name evoke investment in the event.

Fund manaei can invest you either in an action or just a bond, or combine these securities in different proportions. They can choose between investments in R or abroad. They may run the shares of large and popular companies such as Microsoft and the Czech Savings Bank, or they may be confused by small and very risky companies that most of us have never heard of. They may prefer investment to relatively expensive shares of companies that have the prospect of rapid growth, or, conversely, may turn to a relatively undervalued company with the prospect of lower growth profit. And last but not least, manaei can fill 15 and 150 titles in their portfolios. Your future gains and losses are directly related to the way the fund manager decides to invest your pensions. To find out where manaei invests, you should familiarize yourself with the fund’s articles of association or study its current portfolio.

4. Fond manager

Catch funds are only as good as the people behind them. Fund manaei are professionals who decide what to buy, what to sell and when to do it. Therefore, they significantly affect the value of your investment and you should know it at least a little.

Information on who is in charge of the specific investment policy of the fund, on how to carry it out and how long it has been running, is one of the keys to the correct selection of the fund. Make sure the manager who contributed to the fund’s biggest performance growth is

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stle na svm mst, jinak mete bt pozdji nepjemn pekvapeni.

5. Fund fees

Catch funds are not free. You have to pay for a professional pension. But paying enormous resources so that you can invest is like just distributing your pensions. Every crown you give to fund managers or pay in brokerage fees reduces profits or deepens losses. There are a number of fees associated with investing in funds. You should always know at least the two longest, namely a one-time fee for the purchase and sale of share certificates and a kadoron fee for the management of assets.

In the long run, funds of the same category show similar performance (without the effect of fees). Thus, excessive fees can be a frequent cause of backward performance and investment above average. While inputs fluctuate, fees are for sure loss. So you have to minimize it. If two similar funds have only fees, you should definitely prefer the cheaper one.

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