The majority of mutual funds dont make much money and 90% cant even beat the index.

If you can compound 10% annually consistently youre doing well, but this is hardly worth it when you take into account inflation.

Here we are going to look at mutual fund alternatives for big long term capital growth that can make you wealthy over the longer term.

Mutual funds performance

There are many alternatives to mutual funds, however lets first look at why the bulk cant make money and your chances of success are so slim.

1. Mutual funds dont have to report an average growth across all the funds they manage so they simply pick the best and when that fails go for another one and so on.

2. They make dealing fees and this creates a conflict of interest between their income and client profits

3. Bad funds simply get merged in to good ones and when the merged one does badly they merge again

4. They fool clients by telling them to look at the longer term and many investors hang on as this is the perceived wisdom but most investors never make much money

There are more reasons but the above are enough!

The only thing that matters in an investment is performance and that is why if you want to make big capital gains you need to look at alternatives to mutual fund investments.

What performance should you aim at?

A good level to aim at is about 20 30% compounded regularly and there are asset managers achieving this for clients in leveraged investments such as:

FOREX, futures, options and spread betting.

Keeping the risk manageable

Many investors here the word leverage and immediately think to risky, but leverage is a powerful tool in the right hands and the following equation needs to be kept in mind:

Market vehicle traded + Management skills = Risk

It is not the market traded that limits or creates risk, its the managers.

Its a bit like a high performance racing car:

In the hands of a novice the danger is high but in the hands of a formula one racing driver risk is reduced and its the same in trading.

Picking the manger thats right for you

Here is a checklist on how to pick the right manager when looking at mutual fund alternative investments:

1. Look for target growth of 30% per annum and drawdowns under 20% and lasting no more than a year.

2. Look for track records of 3 to 5 years.

3. Make sure the track record presented is representative of ALL funds under management.

4. Look for managers who are prepared to earn money from performance fees only, and dont earn dealing fees This wont guarantee profits of course, but shows the confidence of the manager.

Mutual fund investment alternatives for better growth

The fact is despite the huge adverting done by mutual companies they perform badly as a group today, you dont have to accept sub standard performance. There are plenty of innovative managers out there, who can and do deliver.

They are also prepared to demonstrate confidence in their skills by being paid on performance only.

Mutual fund alternative investments are out there, take some time to look for some and you will be glad you did!