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Guide to picking a fund

  • Describe some of the most important factors when selecting a fund
  • Explain the significance of active and passive selections
  • Identify how long an investor should evaluate the performance of a fund
CPD
Approx.60min
Guide to picking a fund

Introduction

By David Thorpe

The suspension and subsequent closure of the Woodford Equity Income fund revealed to clients that even products run by individuals with stellar long-term track records can fail, making the job of fund selection more difficult.

As well as the asset allocation, the fund picker must also worry about ensuring the risk profile of an individual fund is aligned with that of the client, consider whether the investment style of the fund managers, if they have one, is in vogue at this time, and whether that matters.

There is also how long to stick with an underperforming fund.

All these issues will be looked at in some detail in the following guide. It is worth an indicative 60 minutes' CPD.

David Thorpe is special projects editor of FTAdviser and Financial Adviser

In this guide

CPD
Approx.60min

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

  1. According to Darius McDermott, in the first feature, which of the following is NOT a factor to take into account when selecting a fund?

  2. According to the first feature, volatility and risk are the same thing, true or false?

  3. According to the second feature, when do active funds prove their worth?

  4. According to the third feature what happens if a fund gets too big?

  5. According to the third feature, the Standard Life Gars fund has shrunk in size over the past two years, true or false?

  6. According to the fourth feature, how long theoretically should an investor be looking at a fund to evaluate its performance?

Nearly There…

You have successfully answered all the questions correctly, well done!

You should now know…

  • Describe some of the most important factors when selecting a fund
  • Explain the significance of active and passive selections
  • Identify how long an investor should evaluate the performance of a fund

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