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Your Funds: Adding more controls to your investment process | Business News

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  • Your long-term performance threshold.

No one goes shopping for a vise; you add stocks, bonds or funds to your portfolio in anticipation of top results.

Sometimes early returns are especially good; buy a recently featured place and the hot performance continues. This can allow you to hold on comfortably, even if performance is declining.

Too often, investors cling to fallen angels, investments that were “once good” for me.

I’m not immune. I recently looked at a long-standing Roth IRA holding where the fund’s success for 15 years has been excellent, but ten-year returns are well below average. I shouldn’t have been surprised – the fund has lagged behind its peer group in seven of the past 10 years – yet I have.

I was so focused on the long-term results that I let the recent poor performance fall. However, given that all recent trends are negative, my review showed that the best days of the fund are behind it.

Without reason to expect a reversal in that performance trend, I made a change.

Too often, investors are so pleased to see progress that they don’t see their holding, relatively speaking, lagging behind.

Bring guidelines for your expectations. Look at both absolute and relative performance to determine your satisfaction.

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