A Mutual Fund is only as good as its management team. Just ask anyone who stayed in Fidelity Magellan after legendary investor Peter Lynch left in 1990, and received “not so lengendary” returns.

Magellan was just a Mutual Fund, not a living breathing entity. The smart investors realized that Peter Lynch was the reason Magellan averaged 29% a year, and when he left so did his stock picking skills.

When you invest in Mutual Funds, you’re investing in people. Some of these people are good at their job, and some are not. You need to find the ones who are.

A good investor will look at a fund’s 5-year or 10-returns. That’s great, but who was responsible for those returns? If a mutual fund has returned 17% a year for the last 10 years, but the current manager has only been at the helm for 2 years, then find out who was responsible for the other 8 and invest with them.

If you invest with a manager who has beaten the market over the past decade there is a very good chance that manager will beat the market over the next five to ten years.