6. Short-Term Focus

Do not get carried away by high short-term returns as this might be one of the strategies of the new fund manager to crunch in big numbers in a short duration of time. Returns can shoot up even when a fund manager pursues momentum or buys speculative stocks. This type of approach can make the fund very susceptible in the long run. To see if the fund manager has resorted to short-term focus or not – see whether the stocks being bought are moving in and out of the portfolio at a rapid pace or not. Check the quarterly fact sheet to check this.