My Mutual Fund

July 18th, 2007

I’ve decided to start a new series called “My Mutual Fund“. Basically I will run a fake mutual fund under real life circumstances (fees are subtracted, regulations must be followed, etc) and see how well I do. The biggest downside to this entire series will be the regulations and being limited to just the US markets; I guess it’s a US Mutual Fund.

I believe I am only able to be long US stocks. I may have several different mutual funds that utilize different strategies but I will begin with just one. Now how can I run a fake mutual fund and have it remain realistic? A great site called Marketocracy.com has a very professional system whereby you can open an account for free, and “run” a mutual fund (up to 10 mutual funds actually) that starts with $1 million USD. Perhaps the most interesting part of Marketocracy’s system is that it uses the information from the top 100 members to run a real life mutual fund (it has done quite well too!). I believe members even get paid if they rank high enough…

Now I am not a mutual fund sort of person due to all the regulations, but I thought it would be an interesting series… I don’t like the rules and regulations (for diversification) that are imposed upon mutual funds and as a result I don’t invest in any. I also have a habit of bad mouthing mutual funds (while I’m sure there are some good ones out there). I have even bad mouthed mutual fund managers (though it isn’t their fault the ‘mutual funds’ are so regulated) and figured I shouldn’t criticize them for doing their job unless I’m able to do it better… I really don’t know if I am but I guess time will tell. Consider it a learning experience and one way to test some different strategies to see how effective they are.

I’ve just recently signed up to Marketocracy and I have yet to start a mutual fund, but I’ll keep you posted and have links pointing to the mutual fund for you to check it out. Another series I’m thinking about creating is a “My Hedge Fund” series whereby I won’t be restricted in what I invest and can test some other theories out, but I’ll have to use Investopedia or some other site to track those portfolios. I hope you enjoy the new series, I know I will!

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