Interesting problem to solve!
Most investors look at recent past performance which imo is not the most sensible way of assessing a mf. On the contrary it’s important to know what kind of risks the manager took to deliver the outperformance. Id be happy to collaborate/contribute here. If it’s an active equity fund I’ll want to look at
- Deviation from index (constituents and %). If it’s hugging the index, I’m better off doing passive investing
- Quality of companies (debt levels, score on forensics)
- Trueness to the label (eg many value funds end up buying baap stocks due to peee pressure)
- Long term risk adjusted performance. In the short term, it’s impossible to distinguish between a lucky idiot and a skilful manager
- Performance during bad/bear markets. Personal choice – I’d rather select a fund that outperforms during bad markets.
- Size analysis – size is the enemy of returns. What’s the sweet spot here.
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