Q: How should I review my quarterly mutual fund statement?
A: Don’t just give it a glance and file under “mutual funds.” “When you get your statement, take a few minutes to do the following: Check your current holdings against any new buys or sells, using the confirmation you receive in the mail. Compare your performance for the quarter to a related index such as the S&P 500. After several quarters of lagging the market, it may be time for a change.
Next, check for any taxable events, such as capital gains or losses. It will help with your year-end tax planning,” says Lee Hull, president of Hull Capital Management, a Dallas-based investment advisory firm.
Most statements simply reveal your fund’s allocation within the family of funds you own, and the information is already outdated. For more detailed, up-to-date information on your funds’ holdings, log on to the company’s Web site. “The numbers on your paper statement are normally 30, 60, to 90 days behind. They are just ballpark figures at best,” Hull warns.
Q: What if my statement doesn’t include the individual return on my fund?
A: Contact the company for individual portfolio performance or calculate your own rate of return. To calculate your simple rate of return, take the previous account value and subtract it from the current account value, and then divide by the previous value. Keep in mind that the figure doesn’t reflect compounding.