How Do We Choose the Funds We Use? Step Three: Inspect the Packaging

Hello again! We’re back with Step Three in our multi part series on how we choose the funds we use to withstand volatile markets. Today we’ll describe how we augment selecting ideal product providers by also inspecting the way they package their investment opportunities.

Step Three: Inspect the Product Packaging

These days, there’s nearly no end to the shiny packaging in which product providers can wrap their offerings. There are traditional mutual funds and ETFs. There are hedge funds, target-date funds, annuities, separately managed and/or direct indexing accounts, private partnerships, robo-advisors, and more. Do-it-yourself investors can also go directly to cryptocurrency exchanges and trading platforms to manage their own money.

Regardless of the wrapper, the initial hurdle remains unchanged: Is the product provider managing your money in an appropriate, evidence-based manner, as described above? After ruling out any speculative action, we also want to review each product’s prospectus or similarly detailed disclosures to avoid packaging that is overly complicated, suspiciously opaque, and/or needlessly expensive. (If there are no details to inspect, that’s a big, red flag in itself.)

Selecting the most appropriate structure—or structures—for your unique circumstances usually involves substantial due diligence, as well as a close look at your individual needs. We’ll cover that next, in Step Four.