22 - Sunday, duly 3 31, 1994 - North Shore News BUSINESS Evaluating mutual funds Russell VMoldowan THE BOTTOM LINE WHETHER YOU do your own research on mutual funds or if you prefer to rely on your investment advisor to recommend funds, past performance usually plays a part in your decision to invest in a particular fund. Paying attention to prospective funds ensures that its investment goals and tolerance for risk match -your own. It will also help you to understand the fees and expenses involved. Mutual fund performance can be measured in several ways. A fund's prospectus and/or accompa- nying sales literature contains use- ful information on a fund's past performance. Although past perfor- mance is no guarantee of how the fund will perform in the future, it forms a basis for decision-making. You can also find information coniparing the performance of dil- ferent funds within a specific cate- gory (growth, aggressive growth, income, balanced, ete.) in special surveys done by various invest ment magazines and newspupers. such as the Globe and Matt and The Financial Times. The historical returns of a fund can be measured in two ways: Total rate of return or average compounded annual rate of return, Total return equals dividends paid plus (or niinus) the change in the net asset value of the fund for cach year. Average compound annual return averages the return over a number of years, Yield, for income based mutual funds, measures the relationship between the payouts and the price. and are useful in determining the income stream the fund will pro- vide relative to other investments. it does not, however, include price appreciation. It is also useful to compare the yearly performance of your fund with a broad measure of market performance such as the TSE 300 for stocks and the SMI Bond Index. A large or consistent difference between an index and the fund returns is useful in identifying out- standing fund management. It is also important to examine long-term performance, since your investment will likely be over a similar length of time. A good scale for examining mutual funds is over three, five and 10 year peri- ods. While future performance can't 194 EAGLE TALON 2.0 litre DOHC engine "Front wheel drive 4 wheel disc brakes 135 horsepower Rear spoiler sT¥94854 - $1 9,000 or $A3Bimo. TP. 21,024 ST#94862 - 18, 000 or ST#94651 ~ REGENCY AUTO GROUP 17, 000 or 393/mo. TP, 18,864 18 mo. T.P. 20,064 be predicted. a fund that has con- sistently been in the top 25% of all funds in its class it has a good chance of continuing. To mateh a matual fund to an investor better, Ffook att volatility. This measure of price swings gives me a good idea how a particular fund manages risk compared to other funds in its class. Clients that have a low tolerance can benefit from using volatility. An investment advisor can use database of mutual funds to single out the funds that have the criteria that you, the investor, have speci- fied. A review of the prospectus should then be done to familiarize yourself with the fund before mak- ing an investment choice. A good starting place is a mutu- al fund research published by investment dealers. One publica- tion that is available evaluates the strengths and specialties of 16 major fund companies. The Bottom Line is this: When looking for a mutual fund to invest in, don’t rely solely on the best overall performance. Look for the best performance for the type of fund that meets your objective and that you are comfortable with. Most mutual funds are only availabie from a licensed invest- ment advisor or your financial institution. Draw on their expertise and resources to aid you in your decision. Russell Moldowan is an invest- ment advisor in Vancouver. He advises on investment management and retirement planning. Call or write to him at (604) 661-7475, P.O. Box 10342, Pacific Centre, Vancouver, B.C., V7¥ 1H6. ’94 LASER RS DOHC 2.0 fitre DOHC engine 4 wheel disc brakes 135 horsepower Rear spoiler ST#94259 - $1 7,61 8 or SA Z/mo. PLYMOUTH CHRYSLER 9.20% B.C. GOVT, BONDS... Govt. Short [5.00% 5.75% [ease | | 6.85% | Term rates 90 DAY 190 DAY 36S DAY GAC, 7.60% | 8.38% | 8.75% rates 1 YEAR JYEAR SYEAR cal DAVID BLAIR .. 844-5709 RICHARDSON GREENSINELDS 600 - 1066 West Hastings, Street, Vancouver, British Columbla V6E 3X1 All rates are subject to change withuut sotice. Wo offer NO.FEE-RRSP Free Initial Consultation Douglas W. Lahay CLARK, WILSON PARRISTERS & SCLICTTORS 800-885 West Georgia Street, Van. 687-5700 24 HOUR MESSAGE 643-3161 B ICBC’ policies are not law, | will get you a fair settlement or trial award. Don’t be fooled by high bond and mortgage yields. Protect your wealt] | INVEST INTERNATIONALLY .*Contact Jim Perkins and diversify your portfolio ORTUNE 681-1300 Pra ANC #1750-1075 W Georgia JiM PERKINS VICE PRESIDENT FINAN CTHAL 2.2 litre Turbo iil. 5 speed transmission 217 horsepower 4 wheel ABS brakes 16” alloy wheels ST#93127 - $23,760 or 5A4 mo. TP 26,112 $T#93128 - $23 7359 or $838 imo. re 25.024 TP, 19,776 Based on 48 months, “Q" down payment on approved credit. 1177 Marine Dr., N. Vancouver 980-8501