Everyone agrees that past performance is not a good predictor of future fund success. Even long-term top quartile performers deliver top half in-category performance about 50% of the time. Yet past performance continues to be the number one mutual fund sales ingredient for most investment professionals. Why?
I believe it is because there is a perceived lack of much else for investment professionals to offer. Oh sure, she could brag about the great skills of the fund manager. He could mention the wonderful reputation of the fund family, but I do not hear much else being offered.
In 1997, I set out to see if there was a better way to both select and sell mutual funds. I began by posing a simple question “Do successful mutual funds have similar attributes?” If I could identify the consistent traits of top performers or bottom performers, I could create a system that seeks to properly identify funds and offer more than past performance in the sales process.
A full year of research later, I had identified 11 fund characteristics that serve as the basis for my Mutual Fund Report Card System. It is a simple yet highly successful process that is the centerpiece of my philosophy and process. Many advisors across the country use my Report Cards to drill deeper into their firms'' recommended lists, and for some, it serves as a prime fund selection tool.
The 2010 edition represents the 13th annual printing. The system employs an investment philosophy and process that works, and I stick to it in good times and in bad. The Report Cards include in-category comparative profiles of 4,913 funds broken into 76 investment categories, as well as Best-of-the-Best and Worst-of-the-Worst lists. This year''s Report Cards include fund categories not readily available elsewhere.
