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Rooting Around

When you're looking to invest in a mutual fund, dig deeper than past performance.

This story appears in the June 2004 issue of Entrepreneur. Subscribe »

Mutual fund advertisements tell you, usually in the finest of print "Past performance is no guarantee of future results." While that statement has always been true, now's a particularly good time to take heed.

We've had a three-year bear market where virtually everything lost money, followed by a stupendous year where virtually everything made money, topped off by the biggest regulatory scandal in the $7 trillion fund industry's history. It's been an especially topsy-turvy time for fund managers and investors, which makes it that much harder to evaluate potential homes for your investment dollars.

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