Fintso, a digital solution provider for individual mutual fund distributors and AMCs has released a report detailing a new approach for fund selection.
The report says that MFDs should look beyond past performance to pick the right funds. “It becomes of utmost importance for MFDs to analyse the performance of the fund over many years and look for consistency in returns.” says the report.
In addition, the Fintso report says that MFDs should give weightage to the fund manager’s skills in decision-making and portfolio construction to choose the right funds for their clients. The report focuses on the model that deeps dives into the fund manager’s portfolio decision making ability and identifies factors that lead to alpha creation such as quantitative analysis, top down analysis and bottom up analysis.
The report concludes that having a robust fund selection framework is vital for MFDs to identify actively managed funds that exhibit consistency and stability across timeframes through a disciplined investment approach.
In fact, this would help MFDs in constructing a resilient portfolio which can withstand market volatility, while at the same time generate significant alpha. The use of technology can help in this process and provide dynamic support to the MFDs in changing, and often volatile conditions, points out the report.
