There are two distinctly separate aspects of investing in mutual funds:
· The Risk versus return tradeoff
· Building an “efficient portfolio”
· Asset allocation
Unfortunately, the most attention is generally paid to fund selection. Nonetheless, for years, studies have illustrated that 85 to 95 percent of your portfolios returns are pre-determined by your asset allocation. Below we will briefly discuss both aspects of mutual fund investing. For a more detailed discussion of both asset allocation and fund selection, please refer to the MutualFundAlliance.com Investor Library.