PFA: There are several securities dealers that distribute overseas mutual funds in Jamaica. You may call the Securities Division of the Financial Services Commission to know those registered to do so.

As a first step, secure a prospectus of each fund you are considering. It will give you much information to assist you in making your choice. The dealers that distribute them should have up-to-date prospectuses.

The prospectus provides very valuable information on the mutual fund. It outlines its investment objectives, what type of fund it is, its costs, inclusive of fees, expenses and sales commissions or 'loads', minimum investment allowed, the historical performance of the fund, and the profile of the fund manager.

Identify a fund that has an investment philosophy, strategy or purpose that matches yours. If your objective is capital growth, select one that invests for capital growth.

With a few exceptions, the mutual funds being marketed in Jamaica are growth funds.

If you need safety of principal, select a money-market fund. The fund you select must be appropriate to your needs.

Well-diversified fund

Whatever your objective, select a fund that is well diversified to offset the risk of some investments not living up to expectations or even failing.

Make note of the markets in which the global funds invest. Stable markets are preferable to volatile ones.

There are so many variables to consider, it is unwise to be dogmatic about the recommended mix of assets in such funds.

No one investment should be so dominant that its own performance can seriously affect the overall performance of the fund.

If possible, identify a benchmark against which to measure the performance of the fund. Learn as much as you can about similar types of investments.

Make note, for example, of short-term market-interest rates if you are investing in a money-market fund. Be fair in your comparison - for example, compare a US money-market fund with US short-term interest rates.

Prospectuses usually give performance figures for as long as 10 years. This allows good scope for comparing the fund with itself over time.

Sales charges

Bear in mind, though, that past performance is not necessarily a foolproof indicator of future performance. Last year's top-performing fund is not necessarily the best one to buy this year.

Pay close attention to sales charges. Determine if the fund is front-end loaded - that is, whether sales charges are levied on you, the buyer, at the time of purchase.

Alternatively, if it is back-end loaded, sales charges are levied at the time of sale of your mutual fund units, particularly if the shares are sold before a defined time period has elapsed.

High fees mean a lower return to investors.

Look also at the management-expense ratio of the fund, which is usually calculated on an annual basis. This represents the cost to the investors of owning the fund and includes administration expenses, operating expenses, advisory costs and distribution expenses, which are charged against the fund.

The ratio is derived by dividing the expenses of the fund by the average value of its assets. Such expenses also reduce the return to investors.

How comfortable would you be to invest in a fund that does not reflect your own values? If, for example, you do not drink or smoke, are you prepared to invest in a fund that has a stake in companies that manufacture or distribute such goods?

Know the company

Know who the managers are and what their track record is. Learn what you can, not only about the manager, but about other employees who play a key role in the management of the fund, because their skills are critical to the sound management of the fund. Request that information from local distributors if it is not readily available.

You need to spend some time doing your analysis before you make a decision. If you need help, consult a competent investment adviser or a trusted person who understands these matters.

In the final analysis, a key consideration in making your decision is the appropriateness of the fund to your needs. Bear in mind that although such investments are liquid, they are long term.