Dhanashri Rane, Fundsupermart.co.in

Y ou will be amazed to know there are currently around 41 fund houses operating in India! Each fund house represents a certain investment philosophy, history and expertise which has an impact on the way funds are managed by the fund managers. Therefore, don’t you think it is worthwhile to study a fund house and fund manager to understand whether their style and philosophy is aligned with your investment objectives?

Here, we discuss some of the common parameters used to assess fund managers. These are important because a fund’s performance is directly linked to the fund manager’s ability to consistently select the best-suited picks for his/her fund.

1. Style

This is one of the most important parameters. Most fund managers in India today follow multiple styles of managing funds. Having said this, we can still evaluate fund managers on broadly two styles — first; top down and bottom up approach and secondly value and growth investment strategy.

As the name depicts, the top-down approach emphasises on the impact of certain macroeconomic conditions in a country, sector and finally, a company. For example, in the case of a global fund, the fund manager may make use of this method to decide and maintain the relative weightage of each emerging market in a portfolio.

But, in a bottom-up approach, the company stocks are analysed on their individual merit and selected in a portfolio irrespective of the business cycles.

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Disclaimer:  This article is for information purpose only. This article and information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities/schemes or any other financial products /investment products mentioned in this article or an attempt to influence the opinion or behavior of the investors /recipients.

Any use of the information /any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.

Photographs: Rediff Archives