The roller coaster experience

Just about everyone should have made good money out of the stock market over the past few years, with three years of double-digit growth for the bigger market indices, such as the All Ords and the SP/ASX 200. If you didn't make good money, you should have a real hard look at your stock selection technique!

Challenges ahead
But the year ahead, though looking good right now, remains a challenge. Even though I reckon we'll end up on the positive side for the overall year, picking resource stocks and banks, which has worked well in the past three years, is likely to bring a sad result. However, I should add, for safety reasons, that I'd be inclined to hold banks over resource shares.

Time to get advice
For those heroic types who picked their own portfolios and have done well, but realise they're exposed to shares that have had so much upside that downside has to be around the corner, it might be time to think about relying on an expert. Of course, I'm not telling you what you should do. This is only a suggestion that this could be an option worth considering, as the stock market gets tricky.

Look at these results!
So if you're thinking about the funds options, what are the top-performing funds you should be looking at? Last year, some big time funds brought through some smashingly strong results. For example, the CFS MIF geared fund recorded, wait for it, a 54.28% return!

That's right, 54.28%. And in case you're still using the famous Rove line - "What the #!*!" - yes this can happen, but it comes about by the fund using borrowed funds to ramp up or turbo charge the result.

Tread with care
That said, it has to be pointed out that borrowing - or gearing as the money people would say - can drag you down as fast as it can pump you up. It is actually a magnification effect in either direction. But believe it or not, that wasn't the best outcome by a fund I've spotted. A fund called CFS global resources racked up a 57.64% return! And while these results are impressive - to be accurate, very impressive - don't get too carried away and throw your money their way before doing some extra research about top performing funds.

A Switzer tip
For sensitive corporate types, I'm not bagging CFS funds but simply ensuring my readers avail themselves of the best educative processes before opting for a favourite fund. One-year outcomes should always run second to three- and five-year results when trying to pick a reliable conveyance to put your money on. And five-year results are especially relevant now after three booming years where any plodder could have made good money.

The famous five
The top five funds (source: AAP) with return and fee were:
• EQT small companies 26.15 % and 2.16%.
• Prime value growth 25.34% and 1.44%
• Opis capital dynamic 24.97% and 1.72%
• BT smaller companies 21.97% and 2.03%
• CFS - global resources 21.58% and 2.27%

All things considered
Other things you should think about are the fees, as they do affect your net return, and whether the fund is well-positioned for the future ups and downs of the stock market. Growth fund managers, who were long on cyclical stocks such as resources, are expected to play second fiddle to value fund managers, who pride themselves as being good stock pickers. These managers believe they can find undervalued companies better than most and that's going to be a great asset in a market that's still heading up, but getting closer to an eventual slump. And given five years ago the stock market was really struggling, I prefer funds that have a good five-year track record.

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