Mutual Fund SWOT Analysis

Mutual Fund SWOT Analysis
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Picking a mutual fund can be a difficult choice. One helpful tool in making this decision is the SWOT Analysis. This is an analysis which focuses on the Strengths, Weaknesses, Opportunities and Threats of a particular mutual fund. Many companies make the SWOT analysis simple for potential customers by providing the information in their annual reports. Once these aspects have been identified, the various mutual funds may be measured against one another to determine the best choice for each individual’s unique circumstances.


The exact origins of the SWOT analysis are unknown, but it appears to have originated in businesses in the 1950s and 1960s. It is possible that the acronym was developed by one specific business person or professor, or it may have simply evolved within several different organizations around the same time. Whatever its origins, the SWOT analysis appears to have become more widely used, as well as more tightly defined sometime around 2003.


The information provided by a SWOT analysis can be extremely helpful to an investor who is choosing a mutual fund. An organization’s strengths and weaknesses are key factors to consider when deciding whether to invest your money with them. A mutual fund’s strengths are defined as internal factors on which the organization might rely to add value to their products and services. Weaknesses are also internal factors, which may detract from the value of an organization’s products and services. These might include poor management, low cash flow and redemption rates or unusually high fees. All of this information would be extremely helpful when choosing a mutual fund.


Reviewing the detailed SWOT analysis of a mutual fund or a group of mutual funds and other investment instruments is very beneficial. The SWOT analysis lays out all of the factors that might influence the organization in a way that the investor can compare and contrast the various instruments and weigh the pros and cons of each. One weakness that is shared by all mutual funds is the fact that they have no guaranteed return. Because of this, a mutual fund might lose out to bonds, Treasury bills and other guaranteed investment options due to the nature of the mutual fund.

Expert Insights

Many major financial players use the SWOT analysis to highlight the strengths of their own mutual funds as opposed to others. The strengths of a mutual fund might include such aspects as its positioning within the industry, rates of growth, expense ratios, return on investment and the fund’s ability to attract and keep clients. An organization with a relatively large pool of experienced managers is another possible strength.

External Factors

Sometimes, a SWOT analysis will help the investor determine that a mutual fund is not the right choice for him at all. For example, the investor might determine that certain threats that arose out of the SWOT analysis are too great. Threats are external factors that can include new competitors and changing laws. Tightening laws and regulations can have a negative effect on a mutual fund by closing loopholes of which the funds may have previously taken advantage. Hedge funds are another threat that has arrived on the market in recent years. These types of funds are a threat to mutual funds in that they have a history of bringing markets down, causing damage to non-guaranteed investments including mutual funds.