My thoughts on how to select mutual funds-fafafaya

Selecting a mutual fund is like crapshoot: you don't know what you aregoing to get. What is the difference between Fidelity Value and OakmarkSelect? Is large cap better? or small cap better? Who knows. Sometimespeople choose a fund just because of its brand name or it literally"sounds good".

There are several thousand mutaul funds. They all get characterizedinto a 9-square matrix. Size: larg, medium, small. Strategy: value,blend, growth. Or sometimes Risk: high, medium, low. etc. When you havethousands to choose from. This 9-square thing is just useless.

So what to do? How to choose?

My observation is to focus on three criteria:

1) Choose the right sectors. Like the saying, "when the water is highall boats get lifted". If the sector has strong growth, the odds areall funds will perform reasonably well. For example, internationalfunds. For example, energy and utility funds, as of now.

2) Choose the funds that give you access to hot global markets that youotherwise would have no way to get into. Remember, there are many muchhigher growth outside of US stock markets. For example, CAF gives toaccess to China A shares, MF to the Malaysia stock market, etc. SureI'm talking about ETFs here. But you get the idea. These funds investdirectly in global markets, not NYSE ADS stocks.

3) Choose the right time to exit. While investment in mutal fundsgenerally have a long horizon, it is still important to remind youselfnot to be lazy, and exit the funds when there are clear signs to do so.Of course this is quite difficult sometimes.