Fund Manager Selection Criteria
What do we look for in funds and fund managers?
1. Philosophy/Purpose
Culture - We look for fund managers with strong
values and a solid brand who have the ability to attract and
retain strong talent.
Product Range - different firms excel in different areas of fund
management however we look for managers who provide good options
within the main asset classes namely Equities, Property, Bonds,
Cash and Alternative Assets.
Reputation and Financial Strength is of utmost importance and we
look for companies who can invest in marketing and further
development. We favour firms with independent and widely
distributed ownership
2. People and Organisation
We look for firms who place an emphasis on continued education.
Fund manager experience also matters and we typically favour firms
with a greater number of investment professionals.
We also look for team stability and want to ensure that
the people responsible for past performance are the ones still
making the decisions. Succession planning is also something we
monitor.
Compensation needs to be designed to ensure that the best talent
remains and that the performance goals are aligned in the clients'
best interest.
3. Process
Investment Style - different fund managers have
different investment strategies. Some companies look to invest in
companies based attractive valuations, i.e. they look cheap
compared to other companies in that sector while other fund
managers invest based on growth prospects with less of an emphasis
on price. Each strategy is fine and we advocate having different
approaches to investing in a portfolio.
We do look for fund managers who are consistent and
disciplined and who have a repeatable process when it comes
to buying and selling stocks and generating strong returns. We get
concerned when fund managers chop and change their investment
strategy based on short term market movements.
4. Performance
We look for strong historical performance versus their peers
however we also look at the ups and downs endured by the fund in
order to achieve the performance and the size of the gains and the
losses within the fund over short term and longer term.