Income and Growth Survey: You can't manage all alone

Fund managers can make all the difference, so how to select the right one?

Picking the right fund manager to manage your investments can be a bit like choosing which horse to back in a race. Here are some top tips to selecting the right one:

n Look for award winners: Many fund managers can claim to have won investment awards, so the key is to look for recent awards relevant to where you want to invest. Just because a fund manager was top performer in Far Eastern stocks does not mean that it is the best fund manager for your UK equity portfolio.

Better than absolute performance awards, is to look at awards for underlying investment management skills. Money Management magazine, along with Standard & Poor's Micropal has, for nine years, run an annual award for fund management.

By comparing performance and volatility against similar funds across unit trusts/OEICS, investment trusts, life funds and pension funds, it rated Royal & SunAlliance top, although it was beaten in the unit trust/OEIC category by Fidelity Investments, and by Henderson Investors in the investment trust category.

Robert Mathews, director of institutional and retail funds at Royal & SunAlliance, puts its success down to good teamwork. "We have got an exceptionally good team. Our turnover of fund managers is extremely low and we have a culture of cooperation and help. I think that we have got a lot of stars, but we are not creating people with egos that destroy team spirit."

n Compare like with like: Last year, Mercury Gold & General was the top performing fund over one year in the commodity and energy sector, despite its price falling by 3.59 per cent over the year. On the other hand, Baring American Growth rose 37.85 per cent, but was still only the fifth best fund in North America. In overall performance terms both funds reflected trends in their investment sector.

But while Mercury did better than TSB Natural Resources, which fell by 13.44 per cent but still came fifth in its sector, the top performing Fidelity American fund rose by 84.19 per cent, more than double Barings' result.

Would you be better off with a tracker? Some market sectors can be very volatile. If you are not prepared to lose more money than other investors, a tracker fund has the advantage of shadowing major investment markets.

There is no guarantee that you will not lose money but at least if you do you will be in good company - the chances are that most other investors would have done so too.

n Compare reward against risk: Volatility is all about how far and how fast prices rise and fall. A highly volatile fund may make you a fortune, but could lose you one, too. A less volatile fund may help you sleep sounder but will never be a get-rich-quick investment.

n Read all about it: Follow the business as well as the money pages and you will quickly build up a feel for some of the underlying trends in the markets. A visit to a local library or surfing the Internet can help to build up knowledge too. Some of the top sites are shown at the end of this article.

n Pick an adviser's brains: A good independent financial adviser (IFA) who specialises in investments can be a real help, especially if they take the time to meet the fund managers and keep up to date on all the latest thinking and changes.

Some even manage their own investment portfolios, although many of these have performed poorly against other funds, and the extra costs can mean that the only one likely to get rich is the adviser. If you are tempted, look carefully at past performance against funds with similar investment objectives.

n Take a second opinion: Whenever a share is sold, one investor believes it is a good time and price to buy at, while the other believes it is a good time and price to sell. They cannot both be right.

However good an investor you may be, getting a second opinion from a reputable IFA may be money well spent. It is all too easy to overlook something, and no one is infallible. Look to negotiate a fixed fee for any second opinion, or to place any buying through the IFA at an agreed price or commission level.

n Horses for courses: Some fund managers have a reputation for good management and inspired stock selection in a particular market. But that does not mean that they will be as successful in other markets. Look for consistently good performance rather than any short-term gain - it just might have been good luck.

n Runners and riders: As with betting on the horses, the jockey is as important as the horse. Individual fund managers switch companies and their performance record can go with them. A good IFA should be aware of important market moves - but remember that a good jockey cannot win unless the horse has potential too.

n Keep ahead of the game: Never invest in a market or fund manager just because it has recently enjoyed record performance. Investing with a fund manager that has a first-class track record is no guarantee of success, especially if their top fund managers have just jumped ship. The new team may take time to repeat the success, or may fail to do so at all.

The ideal fund reflects the underlying market but, over time, pulls slowly away from the competition. If your investments achieve that, you will have chosen well. It means selecting not just the right market sectors but the right fund manager too.

For independent financial advisers, call IFA Promotion on 0117 971 1177

Leading investment web sites:

Autif (Association of Unit Trusts and Investment Funds) at: www.investmentfunds.org.uk

Interactive Investor at www.iii.co.uk

Micropal at www.micropal.com

Reuters HSW at www.hsw.co.uk

Trustnet (investment trusts) at www.trustnet.co.uk

Andy Couchman is publishing editor of `HealthCare Insurance Report'

News
Patrick Stewart in the classiest ice bucket to date
people
News
Australian rapper Iggy Azalea was left red faced but, thankfully, unhurt after taking a few too many steps backwards, sending her tumbling off the stage.
peopleIggy Azalea was left red faced but apparently unhurt after taking a few too many steps backwards
News
newsComedian Lee Hurst started trend with first tweet using the hashtag
News
The current recommendation from Britain's Chief Medical Officer, is that people refrain from drinking on at least two days a week
food + drinkTheory is that hangovers are caused by methanol poisoning
PROMOTED VIDEO
Life and Style
A nearly completed RoboThespian robot inside the Engineered Arts workshop is tested in Penryn, England. The Cornish company, operating from an industrial unit near Falmouth, is the world's only maker of commercially available life sized humanoid robots
techSuper-intelligent robots could decide destroying the human race is the kindest thing to do
News
scienceExcitement from alien hunters at 'evidence' of extraterrestrial life
News
newsRyan Crighton goes in search of the capo dei capi
Life and Style
techConcept would see planes coated in layer of micro-sensors and able to sense wear and tear
Life and Style
Customers can get their caffeine fix on the move
food + drink
Extras
indybest

News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Arts and Entertainment
Actors front row from left, Jared Leto, Jennifer Lawrence, Meryl Streep, Ellen DeGeneres, Bradley Cooper, Peter Nyongío Jr., and, second row, from left, Channing Tatum, Julia Roberts, Kevin Spacey, Brad Pitt, Lupita Nyongío and Angelina Jolie as they pose for a
film
Sport
sport
Life and Style
techCould new invention save millions in healthcare bills?
Sport
David Moyes gets soaked
sport Moyes becomes latest manager to take part in the ALS challenge
Voices
A meteor streaks across the sky during the Perseid Meteor Shower at a wind farm near Bogdanci, south of Skopje, Macedonia, in the early hours of 13 August
voicesHagel and Dempsey were pure Hollywood. They only needed Tom Cruise, says Robert Fisk
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Software Developer (Java /C# Programmer)- London

£30000 - £45000 per annum: Harrington Starr: A global investment management fi...

Senior Network Engineer-(CCIE, CCNP, Cisco, London)

£65000 - £75000 per annum: Harrington Starr: Senior Network Engineer-(CCIE, CC...

Senior Network Analyst - (CCIE, Cisco, CISSP)

£70000 - £80000 per annum: Harrington Starr: Senior Network Analyst - (CCIE, C...

Senior Network Engineer-(Design, Implementation, CCIE)

£60000 - £80000 per annum: Harrington Starr: Senior Network Engineer-(Design, ...

Day In a Page

All this talk of an ‘apocalyptic’ threat is simply childish

Robert Fisk: All this talk of an ‘apocalyptic’ threat is simply childish

Chuck Hagel and Martin Dempsey were pure Hollywood. They only needed Tom Cruise
Mafia Dons: is the Camorra in control of the Granite City?

Mafia Dons: is the Camorra in control of the Granite City?

So claims an EU report which points to the Italian Mob’s alleged grip on everything from public works to property
Emmys look set to overhaul the Oscars as Hollywood’s prize draw

Emmys look set to overhaul the Oscars as Hollywood’s prize draw

Once the poor relation, the awards show now has the top stars and boasts the best drama
What happens to African migrants once they land in Italy during the summer?

What happens to migrants once they land in Italy?

Memphis Barker follows their trail through southern Europe
French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

The ugly causeway is being dismantled, an elegant connection erected in its place. So everyone’s happy, right?
Frank Mugisha: Uganda's most outspoken gay rights activist on changing people's attitudes, coming out, and the threat of being attacked

Frank Mugisha: 'Coming out was a gradual process '

Uganda's most outspoken gay rights activist on changing people's attitudes, coming out, and the threat of being attacked
Radio 1 to hire 'YouTube-famous' vloggers to broadcast online

Radio 1’s new top ten

The ‘vloggers’ signed up to find twentysomething audience
David Abraham: Big ideas for the small screen

David Abraham: Big ideas for the small screen

A blistering attack on US influence on British television has lifted the savvy head of Channel 4 out of the shadows
Florence Knight's perfect picnic: Make the most of summer's last Bank Holiday weekend

Florence Knight's perfect picnic

Polpetto's head chef shares her favourite recipes from Iced Earl Grey tea to baked peaches, mascarpone & brown sugar meringues...
Horst P Horst: The fashion photography genius who inspired Madonna comes to the V&A

Horst P Horst comes to the V&A

The London's museum has delved into its archives to stage a far-reaching retrospective celebrating the photographer's six decades of creativity
Mark Hix recipes: Try our chef's summery soups for a real seasonal refresher

Mark Hix's summery soups

Soup isn’t just about comforting broths and steaming hot bowls...
Tim Sherwood column: 'It started as a three-horse race but turned into the Grand National'

Tim Sherwood column

I would have taken the Crystal Palace job if I’d been offered it soon after my interview... but the whole process dragged on so I had to pull out
Eden Hazard: Young, gifted... not yet perfect

Eden Hazard: Young, gifted... not yet perfect

Eden Hazard admits he is still below the level of Ronaldo and Messi but, after a breakthrough season, is ready to thrill Chelsea’s fans
Tim Howard: I’m an old dog. I don’t get too excited

Tim Howard: I’m an old dog. I don’t get too excited

The Everton and US goalkeeper was such a star at the World Cup that the President phoned to congratulate him... not that he knows what the fuss is all about
Match of the Day at 50: Show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition

Tom Peck on Match of the Day at 50

The show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition