Analyzing the chart of a mutual fund is the best way to determine how well the fund is performing. It is impossible to conduct a fundamental analysis on a mutual fund because you don’t know which asset and how much of it the fund is holding at any one time. Mutual funds are not required to disclose this information. With charting, or technical analysis, however, you can get all of the information you need in a simple picture.

Mutual-fund charts are based solely on the price movement of the mutual fund. If you see the price of the fund moving higher, you know the fund is gaining value. If you see the price of the fund moving lower, you know the fund is losing value. As simple as that seems, there is nothing condescending in that statement. It simply focuses on the most important issue you, as an investor, should be concentrating on.

When you are analyzing a mutual-fund chart, you should focus on the longer-term performance of the fund. In most cases, you will be holding onto your funds for at least a year or two, and you will want to see how these funds have done during the past few years—not just during the past few months. To look at the long-term performance of your funds, you should utilize a five-year (5y) chart. To access the Charts video, click here.

Of course, past performance of a mutual fund is never a guarantee of future movement, but by using a five-year chart, you will avoid jumping in and out of a mutual fund too rapidly. Actively trading stocks can be expensive, but actively trading mutual funds with large fees can break the bank. At this point, you should be focusing on getting funds into your account. In the following sections, you will learn how you can monitor your funds and make adjustments to your holdings utilizing the Yahoo! Finance portfolio.

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