Global Financial Contagion 2011 - European Debt - Middle East Unrest - US Debt Ceiling - Research Mutual Fund Risk

e U.S. debt ceiling, the European Debt Crisis, the Middle East Contagion with Tunisia, Algeria and Egypt all seeing violent protests highlight the vulnerability of the global economy. Clearly you must be positioned with you personal investments for asset protection. The ability for a quick exit of your investments makes timely and fluid mutual fund research imperative.

Research and understand the risks before you invest.

Research Mutual Fund Risk in Global Financial Contagion is critical. The rules have changed since the subprime meltdown of 2007 and the Greek economic contagion of 2010. We also have added risks such as disasters like the BP Horizon Deepwater oil spill. This oil spill is now the biggest environmental disaster in the U.S. history. Bigger than the Exxon Valdez disaster. The disaster wiped off $100 billion from BP's market capitalization in less than two months.

It is estimated that the majority of Britain's pension plans have investments in BP. It also estimated that Americans hold 40 percent of BP's stock. The drilling moratorium affects a whole Gulf Coast economy and the drilling and oil industry. The oil spill disaster contagion has led to Norway banning new deep sea drilling. Thus you have two financial contagions to contend with in 2010, the European Debt contagion and the BP oil spill Contagion.

These disasters happen quickly and you need to be prepared for the ongoing contagion. Research mutual fund risk in global financial contagion means you are prepared to move quickly. In times of contagion you do not want to be encumbered by researching hundreds of individual stocks or bonds in a fund. You want to have done global financial contagion risk management of just the fund itself. After all one of the reasons you buy mutual funds is consolidation of information.

The idea of a mutual fund is diversification over different companies and industries to smooth impending volatility. You need to do research on performance, management and other particulars of the mutual fund. Online sites like Morningstar will help your mutual fund research for the type of fund that suits your portfolio allocation.

What you must be particularly vigilant on is results after economic contagion. You must be vigilant on risks such as investments in areas vulnerable to economic and financial contagion. Finally you must analyze and crtitque how fund mangers have performed when confronted by financial crisis contagion. Market meltdowns and financial crisis are game changers. How are fund and it's mangers react is critical to your risk and performance as an investor.

Step 1

The first point of mutual fund research is to determine what type and styles you want to invest in. Do you want to invest in stocks, bonds, commodities, money market, specific sectors or a balance of these? One of the main purposes of investing in a mutual fund is to spread your risk. Another is to share in investment potential without the constraints of limited capital.

Step 2

The next point of mutual fund research is researching the managers. Determine whether you want an actively managed fund or to be in passive or index following fund. From there you can research the managers’ performance and style. It is important to not be caught up with what may be a flash in the pan or a marketing campaign.

Step 3

Research the investment limits and eases of investment. Can you invest directly from your salary or bank account? Research if you can have capital gains and dividends reinvested automatically also. The purpose of a mutual fund is to alleviate stress and headaches research everything you can to ensure that.

Step 4

Mutual fund research includes the liquidity of the fund. If you see any history of investors having trouble getting money out of the fund is very wary. The global financial crisis underscored this point with many mutual funds freezing assets and withdrawals.

Step 5

Check performance, mutual funds must maintain audited performance track records. Make sure you look at the records, are they inflated by one off events? Understand your alternatives such as ETFs and closed end funds and compare them in your mutual fund research. When you Research mutual fund risk in global financial contagion you must be comfortable with all these steps. If you are not you risk your financial health.

Tips

• Be thorough and plan a timeline for financial goals
• Research mutual funds that satisfy your investment goals
• Understand the Consequences of Economic Contagion
• Understand the Consequences of Disaster Contagion

Warning

• Read thoroughly the risk disclosure statement from the fund; know implicitly the risks of the fund.
• Discuss your investment and mutual fund research with your financial advisor.
• Check the Quick Guide to Mutual Fund Ratings.
• Check the Quick Guide to Mutual Bond Funds