Mutual Fund Holdings — What’s Inside Your Fund?

Do you investigate the mutual fund holdings inside your mutual funds before you invest? I have some very strong feelings about doing this (which we will get to). But if you want to do it, it’s easy.

First, clarify the symbol of your fund. Usually you can find that on your investment statements. If your statements don’t display the symbol, call your custodian to get the information. Mutual funds typically have a five-letter symbol ending in “x.” If you’re fund has fewer than five letters, it may be an ETF or individual stock.

Once you have the five-letter symbol, you can go to Yahoo! and input the symbol. The first listing to come up will usually be from Yahoo! Finance. Click on that listing. The page that comes up will have most of the information you are looking for – including the top 10 holdings.

If you want a complete listing of all the holdings, simply Google the name of the fund and go to the homepage. There, you’ll be able to pull up all the holdings of the fund as of a certain date. There are a few caveats of course.

The first is that the data you are looking at is historical. By the time you see what the fund is holding, the chances are high that the fund has bought or sold at least some of those holdings.

The second caveat is actually more of a question. And the question is, why on earth do you care what the holdings are? If you are interested in buying a fund, it’s highly likely that you are interested because of the investment performance. If you think you know which stocks a fund should and shouldn’t buy, why don’t you just buy those stocks yourself?

Of course it might be interesting and entertaining to see what stocks a fund manager buys but that should not influence your decision to buy the fund or not. When you buy a fund you do so because its performance fits in with your investment strategy. If you make your buy or sell decision based on how you feel about the equities the fund manager buys, you’re basically second-guessing that manager, and that’s just not a good use of your time or money.

Do some careful mutual fund evaluation. Pick your fund manager carefully, of course. And make sure the fund fits in with your investment strategy. But once you do, let them make their decisions. And while we’re on the subject, let me add that you have to be patient. Not all stock picks work out, and even fewer work out over your time frame.

If a fund manager has been able to produce the results you are looking for over the time frame that makes sense to you, and if that performance fits your personal investment strategy, buy the fund and go on to the next thing on your list.

Not only is looking into the holdings a waste of your time, it can be very dangerous to your financial health. Again, if you know enough to buy and sell stocks at the right time, you should do so without wasting money on a mutual fund. But if you buy mutual funds, it’s a declaration that you need the expertise of the fund managers. That being the case, choose carefully, but once you do, let them do their jobs.

What’s your take? Is it important to know what’s inside your mutual funds?