How to find a good fund manager

For fund managers to deliver you market-beating returns is no easy task. Phil Oakley explains the ratio that allows you to sort the skillful from the lucky.

The job of a professional fund manager is simple in theory. You have to beat the market. You have to make more money for your investors than they could have made by using a cheap tracker fund to follow the underlying market. But doing this in practice is far from easy.

And if you're an investor looking to find a manager who can actually deliver market-beating returns, you'll find that's a tough job too. Plenty of investment websites have fund-manager league tables. But how do you know if the latest hot fund or manager isn't just a flash in the pan? Is there really long-term skill involved, or just short-term luck?

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Standard Life UK Unconstrained60.9%97.9%4.750.8
Invesco Perpetual Aggressive51.8%76.5%5.311.14
Schroder Recovery49.7%67.5%4.530.81
Cazenove UK Opportunities42.5%97.7%4.311.52
Ecclesiastical UK Equity39.1%83.3%4.521.37
iShares FTSE 250 ETF34.3%65.8%3.091.11
IMA UK All Companies benchmark25.1%48.3%Row 6 - Cell 3 Row 6 - Cell 4

Phil spent 13 years as an investment analyst for both stockbroking and fund management companies.

 

After graduating with a MSc in International Banking, Economics & Finance from Liverpool Business School in 1996, Phil went to work for BWD Rensburg, a Liverpool based investment manager. In 2001, he joined ABN AMRO as a transport analyst. After a brief spell as a food retail analyst, he spent five years with ABN's very successful UK Smaller Companies team where he covered engineering, transport and support services stocks.

 

In 2007, Phil joined Halbis Capital Management as a European equities analyst. He began writing for MoneyWeek in 2010.