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Commentary

Mistakes to Avoid When Selecting a Large-Growth Fund

Go beyond total returns and dig into the nuances of the category.

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Let’s say you’re fed up with a large-growth mutual fund you’ve held for umpteen years. You’re sick of watching it trail its peers during a fantastic market for growth stocks, and you’ve finally decided to pull the plug. How will you go about choosing a new fund?

You could just look at trailing returns and pick one of the best-performing funds of the past year or five years, but that’s a lazy and ineffective method, as you surely know (top performers from a recent past period often revert to the mean and underperform in the future).

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Josh Charlson does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.