Forex

Most of us wouldn’t buy a new home just because it looked good from the
outside. We would do a thorough walk-through first. We’d examine the furnace,
check for a leaky roof, and look for cracks in the foundation.
Mutual fund investing requires the same careful investigation. You need
to give a fund more than a surface-level once-over before investing in it.
Knowing that the fund has been a good performer in the past isn’t enough
to warrant risking your money. You need to understand what’s inside its
portfolio—or how it invests. You must find out what a fund owns to know
if it’s right for you.
The stocks and bonds in a fund’s portfolio are so important that Morningstar
analysts spend a lot of their time on the subject; news about what
high-profile fund managers are buying is a constant source of e-mail chatter
in the office. Our analysts examine fund portfolios of holdings, talk with
the managers about their strategies in picking those holdings, and check At the most basic level, a fund can own stocks, bonds, cash, or a combination
of the three. If it invests in stocks, it could focus on U.S. companies
or venture abroad. If the fund owns U.S. companies, it might invest in
giants such as General Electric or Microsoft or seek out tiny companies that
most of us have never heard of. A manager may focus on fast-growing companies
that command high prices or on slow-growth (or no-growth) firms
trading at bargain-basement prices. Finally, managers can own anywhere
from  to hundreds of stocks. How a manager chooses to invest your money
has a big impact on performance. For example, if your manager devotes
much of the portfolio to a single volatile area such as technology stocks, your
fund may generate high returns at times but will also be very risky.
on recent changes to the lineup. Knowing what a fund owns helps you understand
its past behavior, set realistic expectations for what it might
do in the future, and figure out how it will work with the other funds
you own.