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Private Market Investors Say Fees Matter Most In Manager Selection
Fees always matter, but Morningstar has a more comprehensive way to rate fund management. They use a 5 parameter criteria. These criteria are: Process, Performance, People, Parent, and Price, not necessarily in that order of importance. Here is a Link to their 5-P methodology on this matter:
But caution must be applied. Easy investment answers do not exist. Here is a Link that takes exception to the predictive usefulness of most fund rating systems:
The persistent enemy to all projection methods that heavily trade on past performance data is reversion-to-the-mean (RTTM). Fund performance data strongly supports the observation that RTTM is real and a killer. So, investors, please be aware of the dangers in any correlation. Change happens and correlations decay.
Comments
Fees always matter, but Morningstar has a more comprehensive way to rate fund management. They use a 5 parameter criteria. These criteria are: Process, Performance, People, Parent, and Price, not necessarily in that order of importance. Here is a Link to their 5-P methodology on this matter:
http://www.morningstar.com/InvGlossary/morningstar-analyst-rating-for-funds.aspx
But caution must be applied. Easy investment answers do not exist. Here is a Link that takes exception to the predictive usefulness of most fund rating systems:
https://www.investmentnews.com/article/20171026/BLOG09/171029958/are-morningstars-ratings-a-good-guide-to-mutual-funds
The persistent enemy to all projection methods that heavily trade on past performance data is reversion-to-the-mean (RTTM). Fund performance data strongly supports the observation that RTTM is real and a killer. So, investors, please be aware of the dangers in any correlation. Change happens and correlations decay.
Enjoy the references. Reading time is short.
Best Wishes