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CFA Institute: Why Good Mutual Fund Research Is Hard to Find

(Present location excepted.)

From 2016, but included in this morning's CFA Institute newsletter.

[The author examines] why one firm [Morningstar] dominates retail mutual fund research globally. By ... [her] count, there are at least three reasons why retail investors do not have access to more options:
  1. Selecting funds is easier said than done.

  2. The restricted access to information required for fund selection prevents a more vibrant funds research market from emerging.

  3. The research industry’s business model is difficult.


  • edited July 2020
    The first comment is insightful:
    Adam Wright says: 11 January 2016 at 09:52

    I would add that quantitative analysis in fund research goes well beyond the specific track record of the fund(s). It should also dive into the underlying portfolio holdings which requires a significant amount of securities analysis as well. If you didn’t perform this task how else would you know if you are adding to a well-priced portfolio?
    Additionally, if you didn’t perform this task how can you be sure the manager is actually doing what they are saying? In other words, you have to look behind the numbers as they do not tell the entire story nor do they indicate forward looking return potential.
    My belief is that a strictly quantitative analysis would create an investment process that is not markedly different than performance chasing.

    I’ve all but given up on fund managers, at least on the equity side, in my mind they have all disappointed. I still hold a couple of balanced funds which seem to compete well but I also hold IVIQX which continues to be even more cautious than me.
  • The data available at MFO premium provides quite a bit of useful information for a much lower price than M*.

    But people should always take a look at what's in the portfolio. And how often it changes.
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