It may be enticing to jump into a new mutual fund. A new fund’s small size and its ability to start fresh with a manager’s favorite investments give it the potential to beat much larger, more proven funds. But finding a big winner among the hundreds of new funds launched each year can be daunting. A recent study tracked funds started in 2004, 2006 and 2008, following each freshman class for five years. About two-thirds of all new funds either were shut down or did not beat the average performance in their respective categories.
You can improve your chances of finding a winning new mutual fund by making sure that the fund manager is seasoned and has used the same strategy successfully in the past…and avoiding funds that invest in red-hot asset classes, which often fade before long. New funds that focus on more reasonably priced areas of the market can load up their portfolios with bargains that pay off in the future. Based on those criteria, the following new no-load mutual funds look attractive for the long haul… Meridian Small Cap Growth Fund (MISGX), launched in December 2013, is run by former managers of Janus Venture and Janus Triton, two small-cap growth funds with strong records. The Meridian fund gained 17% in 2014 as of November 30, even though small-cap growth stock funds gained only about 1%, on average. Artisan High Income Fund (ARTFX), a high-yield bond (junk-bond) fund launched in March 2014, is managed by Bryan Krug, who ran Ivy High Income Fund for more than seven years, where he delivered very strong performance.