investing

Should You Invest in New Mutual Funds Right Away?

A fresh fund can have its advantages, as long as it has a manager you trust.

Let’s face it, there are plenty of reasons to avoid a newly launched fund. For starters, there’s the absence of a long-term track record, as well as the sticky question of whether the fund will survive. So why would anyone buy shares in a new fund?

Because new doesn’t necessarily mean green. If the fund is managed by a proven investor who has honed his strategy elsewhere with good results (see Trusted Managers, New Funds), then you know, to some degree, what you’re getting.

And there are other benefits. Managers at a new fund can build a fresh portfolio from scratch. There’s no need to hang on to existing holdings—perhaps to avoid triggering a taxable gain—that they might not choose to buy today. Plus, new funds are typically small, which means managers can move in and out of a security without tipping off the market or affecting the price. This is especially important with small-company stocks. “Those are all important considerations, and they can tip the scales toward a new fund,” says Dan Culloton, a Morningstar analyst. But nimbleness alone won’t make a difference unless the manager has a reliable strategy.

Kiplinger's Investing for Income will help you maximize your cash yield under any economic conditions. Download the premier issue for free.

Most Popular

Who Should Return Their Third Stimulus Check to the IRS?
Coronavirus and Your Money

Who Should Return Their Third Stimulus Check to the IRS?

Some people who receive a third stimulus check are required to send it back to the IRS. Others can return it voluntarily.
April 12, 2021
Where's My Stimulus Check? Use the IRS's "Get My Payment" Tool to Get an Answer
Coronavirus and Your Money

Where's My Stimulus Check? Use the IRS's "Get My Payment" Tool to Get an Answer

The IRS has an online tool that lets you track the status of your third stimulus check.
April 4, 2021
Third Stimulus Check Calculator
Coronavirus and Your Money

Third Stimulus Check Calculator

Find out how much your third stimulus check will be using this handy tool.
April 8, 2021

Recommended

The 25 Best Low-Fee Mutual Funds You Can Buy
mutual funds

The 25 Best Low-Fee Mutual Funds You Can Buy

The key to building wealth long-term is buying high-quality, low-cost mutual funds run by seasoned stock pickers. Here are our favorites: The Kiplinge…
March 27, 2021
How the Kiplinger 25 Fared in 2020
Kip 25

How the Kiplinger 25 Fared in 2020

Our flock of actively managed funds survived a wild year and as a group delivered benchmark-beating gains.
March 24, 2021
4 Highly Rated Vanguard Dividend and Income Funds
Investing for Income

4 Highly Rated Vanguard Dividend and Income Funds

This quartet of Vanguard dividend and fixed-income funds earn high marks from CFRA. Better still: They can be had for a song.
March 23, 2021
Should You Worry About Rising Interest Rates?
Investing for Income

Should You Worry About Rising Interest Rates?

Look past the 10-year Treasury yield. Smart investors cast a wide net.
March 23, 2021