Four ways elite advisors select mutual funds

How do professionals select the people who will manage their money? That is the fundamental question that top-rated Registered Investment Advisors (RIAs) have to answer as they select the mutual funds that go into their portfolios.

What are the traits that are crucial for selecting a fund? At Korving & Company we believe that the number one consideration is clarity and consistency of investment philosophy. The fund should know what its role is and stick to it. If a fund begins to change – a term known as “style drift” – it loses our favor.

Following closely behind is risk-adjusted return. This is a fairly complex calculation. One observer defines it as

… a measure of the return on an investment relative to the risk of that investment, over a specific period.

A third criterion is the distinctiveness of strategy or expertise in the strategy. We create diversified portfolios. We choose funds that are distinctive and that are managed by individuals or teams that have exhibited extraordinary expertise in their particular investment strategy.

Fees are another consideration. Most funds offer several classes of the same fund, differing only in the expenses they charge. We have the ability to choose the least expensive version of the fund we wish to use.

By using the services of a professional RIA, all of these factors go into creating your portfolio. Call us for our guidance in choosing the best people to manage your money.

 

 

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