InvestmentsMay 30 2013

The Rant: Do a proper job of selecting funds

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You would go to a dealership and take a look at the car first-hand, and take a look at the cost to make sure you were getting value for money – and maybe a few furry dice.

You certainly wouldn’t invest your hard-earned money into the car until you were completely satisfied it met all your needs.

Selecting funds for your clients should also be comprehensive. So, why do advisers feel it’s acceptable to invest their clients’ money based on a review in a newspaper?

A major part of the fund selection process should be sitting down with the manager and discussing their management, their current views on their asset class, their recent fund alterations and the rationale for this.

This is data you cannot glean from a factsheet and should form a crucial part of the qualitative analysis – past performance is not a guide, after all. And, in the main, fund managers like these conversations.

Fund groups are very accommodating in setting up teleconferences, as they want to speak to potential investors.

So, if you are picking funds, do a proper job. If you outsource, make sure you scrutinise their analysis. It’s in your clients’ best interest.

Andrew Alexander is head of investments at Foresight Portfolio Management