5 Tips to Pick a Fund Like a Pro

In the previous two blog posts in this series, we defined funds and discussed how to choose the right type of fund for you. But this still left you with about 250 to pick from. When giving people financial advice about their pensions and investments, we go through a careful process for selecting funds working in conjunction with our parent company and their committee of investment experts. These are the things we look at! 

Assuming you’ve gone through the first two blog posts in this series and decided you want a risk level 6/10 fund that is actively managed and invested in sustainable industries. What next: 

1) Past Performance 

You must be careful about this, as every investment brochure ever will say that past performance is not a guarantee of future performance. Which is absolutely true, but it is a good indicator. Christiano Ronaldo’s previous exploits does not mean he is definitely going to be amazing next season, but probably means you would still pay £150 million for him. 

2) The fund manager 

This could also be called ‘future performance’. But without our crystal ball we must look at who is steering the ship and in which direction. As financial adviser, we meet regularly with the fund managers to understand their investment strategy and plan for the short and long term. We also look at the fund manager themselves and their team and look at how they have managed previous investments. 

3) The charges 

Probably the only guarantee in a fund is the charge. It is most often a fixed fee set as a % of the amount you invest in the fund and charged annually. Charges can be higher for high profile funds and investment managers, and you must decide if the extra fee is worth their expertise. 

4) The asset breakdown 

Take a look inside the fund and see what it is invested in. From the fact sheets, you can have a look at the top 10 holdings as well as the markets and industries they are invested in. These should match with the investment strategy and your personal ethics. 

The world of investments is a mystery to most of us, as there is a mountain of choice and information to research from. At Parker Financial Advice we recommend funds from the whole of the market and are constantly researching individual funds and investments. We’re super nerdy about it, so would love to discuss it with you. 

At Parker Financial Advice, we offer no plan no fee! Consultations and reviews of your current situation are free, and our fees only come if you decide you want us to set up and manage your plan. It is our mission to make financial advice accessible and available to everyone at all stages of their financial life.