Prior to investment, Mutual Funds must be analyzed with respect to orientation (close-ended, open-ended), fund manager performance, investment objective, etc. Knowing your Fund Manager is one of the most important aspects. We’ll delve into the nitty gritty of identifying the criteria for Fund Manager evaluation in this article.
Prior exposure to managing funds
Fund Managers have their own style of investing in stocks. One has to see the past trends to gauge this style. Trends will reflect on risk-taking ability and attitude (conservative/liberal) towards investments.
Is the fund being handled by a single person or by multiple people? From an investment perspective the adage “Too many cooks spoil the broth” holds good! However, reliance on one person can be a destabilizing factor. An optimum combination will be of 2-3 people.
A fund that follows a process driven diktat, forces the fund manager to be driven by the guidelines and hence won’t be unstable even if the Fund Manager leaves for greener pastures!
Mutual Fund Fact sheets published by fund houses monthly/quarterly/bi-annually have details about Fund Managers. Don’t forget to check them out.
Fund Managers use different tools and techniques to buy stocks. Style of investment will pertain to kind of stocks invested in, i.e. whether the stocks are growth oriented or value oriented.
Follow the above salient points to make a rational investment decision in a Mutual Fund. A Fund Manager is the charioteer for a fund. S/he can make it or mar it!
Have you come across any other way to evaluate a Fund Manager? What do you think matters more- the philosophy and style of the fund house or the Fund Manager?