Every year, Investment Executive applauds a fund manager for his or her exceptional investment performance.
Despite the fact that IE calls it our Fund Manager of the Year award, we actually look for managers with superior long-term track records. Anyone can have a good year or two; we look for managers with outstanding 10-year records, on the basis that 10 years represents two average business cycles, which means that excellent performance over that time frame is probably due to manager skill, not simply luck or good timing.
IE also looks for consistency, on the basis that investors would want positive returns year in and year out. This speaks to manager skill, but also to the needs of investors — while the fund’s overall performance must be excellent, poorly timing the purchase of a very volatile fund could neutralize much of the benefit to the investor.
Every year, Investment Executive applauds a fund manager for his or her exceptional investment performance.
To find funds that meet these criteria, we plug data from Morningstar Canada on every fund with a 10-year record into a point-based scoring system. Points are awarded for each year of positive annual returns, each year of relative outperformance, and each year’s quartile performance. We also factor in funds’ cumulative 10-year return, their MER, and their correlation with the S&P/TSX composite total return index.
Typically, the funds that rank well in our methodology are steady, consistent performers with typically low MERs. This year’s winner is an exception.
— JAMES LANGTON
How IE selects its Fund Manager of the Year
Managers with superior long-term track records
- By: James Langton
- December 5, 2007 December 5, 2007
- 11:44