I believe the key to mutual fund investing is minimizing taxes and reinvesting returns. Many investors hold mutual funds either short-term or long-term, and sell them when they underperform to go after higher performance. The biggest performance killer is taxes, not fees. Even if you hold a mutual fund long-term before selling, you still pay 15% in long-term capital gains (reduced from 20% just recently). That is 15% that could be earning you more performance in subsequent years. If you delay paying that 15% to the IRS until you really need the cash, you would have generated more income on those taxes you would have paid out. I think it would be interesting to work out the numbers, and I'll do this as an exercise for next time, to show what a difference this could make after 20 yrs.
So I don't go for the hot performers, or the flavor of the month/year. My personal favorite is PRWCX (T. Rowe Price Capital Appreciation Fund). Pretty conservative, and steady performance, averaging 11.5% return for the past 5 years. And guess what? It's never lost money since 1996 (as far back as history goes), not even during the recession years of 2000-2002.
And it's so !@#$ boring I don't even bother to watch it. Which keeps me from selling it. :)
Boring makes you money.
I have $130K invested in this fund.