Approach: The following is how we assess funds.
The main focus of Fund Hunter will be on the best available funds. There is little value covering funds that are unlikely to perform well.
A) Fund backdrop
- Mandate (where): This is where a fund invests i.e. UK listed small cap stocks.
- Investment style (how): The main investing styles are: value, quality and growth.
- Manager (who): The manager (s), the fund management house and fees.
B) Fund holdings
- Strong results for a fund may have been achieved by taking more risk.
- It is therefore necessary to consider individual fund holdings.
C) Fund drivers:
- Asset allocation: Some asset classes tend to perform well with US equities a good example.
- Sectors: Some sectors tend to outperform over the long-term.
- Themes: Theme investing needs to be treated with caution given that many are cyclical.
Brief Case Study: Fundsmith Equity