The Sage Guide to Mutual Funds

• Book Title: The Sage Guide to Mutual Funds - Superior Investment Wisdom form the Number One - Online Mutual Fund Gurus
• Authors: Alan and Stephen Cohn - founders of Sage online
• Year written/published: 1999
• Some extracts:

subjective test on morningstar.com

• gather your group of potential funds
• enter the fund ticket symbol
• has the fund performed in the top 50 percent most years?
• is its alpha, under the ‘best fit index’ column, greater than zero?
• is its ‘bear market decile rank’ 6 or lower?
• does the fund hold multiple sectors and have less than 40% of assets in all sectors?
• does the fund have at least 80% of its assets in stocks?
• is the start date of management at least 3 years?

risks and returns…

• low risk, high return - well-diversified portfolio
• high risk, high return - large stocks
• low risk, low return - bonds
• high risk, low return - small stocks, international, emerging market

international stock subjective test..

• is its alpha, under the ‘best fit index’ column greater than zero?
• is the sharpe ratio greater than 0?
• does the fund have exposure in at least 3 of the following regions? Europe, Japan, Latin America, or the Pacific Rim?
• Does the fund have less than 65% of its assets in each region?
• Under the ‘country exposure summary’ are there more than 4 countries listed?
• does the fund hold no more than 20% of its assets in any one country?

some useful indexes for specialised funds…

• value line index
• lehman brothers aggregate bond index
• MSCI EAFE Index