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  • How we analyse funds

    We explain what it takes for a fund to make the Wealth 50 list, and how the selection has served our clients.

    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

    The Wealth 50 is a list of our favourite funds – the funds we believe are best in class. It’s designed to help you choose the best investments for your portfolio.

    There are more than 3,000 funds available to UK investors. The Wealth 50 (previously the Wealth 150) helps narrow the field so investors can choose from a shorter list of what we think are the best funds available.

    Decided you would like to invest in emerging markets? We have four preferred funds in the sector. Want exposure to European stocks? We have five on the list.

    We won't get it right every time and not every fund on the list will always rise in value – that's an impossible task. But if we pick more winners over the long run, we feel we've done right by our clients.

    We do not take payment for promotion

    Firstly, it's important to make clear we never take payment or commission for funds to appear on the Wealth 50. We only look at performance potential.

    We negotiate hard on your behalf to lower fund costs. In lots of cases we've got significant discounts for you. And all the benefit gets passed on to you. Ultimately, we only do well if our clients do. If a fund does well, your investment grows, the fund gets bigger and that is better for us too.

    It does not make commercial sense for us to promote a shrinking fund.

    How we pick funds

    When it comes to our analysis, a fund manager's track record is the first port of call. Not just a performance chart, that only tells a part of the story. We need to see the individual shares or bonds they’ve invested in over the course of their career. We then transform this data so that we can use it within our own, one-of-a-kind quantitative analysis system.

    We need this data to cover at least seven years, and ideally ten. We’re strict when it comes to experience because markets are cyclical, and these cycles on average last about seven years. We want to see whether a fund manager sticks to their process, particularly when the way they invest isn’t in favour. Often, this separates the ordinary from the extraordinary.

    No manager is infallible though, and no-one can make the right calls every time. When they get it wrong, the fund will fall in value.

    Ultimately we want to find managers with great stock-picking talent – those who invest in great companies, even if they're in an area that's out of favour at the moment. We like to see positive stock selection when analysing fund managers’ track records. Our experience tells us managers with consistently good stock selection have better prospects of outperforming over the long-term.

    Meeting fund managers is a key part of our process.

    We cross reference what we’ve learnt from our analysis with what they have to say. Finding out about a manager’s philosophy and process is vital. But we also want to understand their background and personality, what motivates them, and how they're incentivised.

    We meet managers several times before even considering the fund for the Wealth 50. And once a fund's been added we meet them, talk to them over the phone, or trade emails on a regular basis. It’s quite possible we know more about these fund managers than anyone else in the country.

    Each part of our process is designed to make sure the Wealth 50 is full of fund managers who can help you make the most of your money. For a new fund to make it onto the Wealth 50, the final say is left to an independent vote by our investment team.

    More about the Wealth 50

    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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