What factors should I consider in choosing a balance of mutual funds?

What factors should I consider in choosing a balance of mutual funds?

When choosing a balance of mututal funds the factor that you really want to consider is how each individual mutual fund plays out as part of the overall portfolio. So it's always "Why do I have this fund?" and "How is this fund going to complement all my other funds in my portfolio?" That's very different than saying: "I want to pick these five really good funds". Usually when you're looking at a group of funds that are doing very well over a period of time, whether that's five years or something like that, what you're doing is you're probably picking funds that are very similar. So what you really want to do is pick funds that have dissimilar price movements, funds that are going to react to different economic events around the globe in different ways. So US versus non-US funds, large versus small, value versus growth, all these different factors of funds respond to different economic factors differently. Together they're going to help decrease the volatility of your portfolio and as a result increase your returns.