Asset managers think the size of a fund is about as important a selection factor for fund selectors as the investment philosophy of the team. In practice, fund size only ranks 9th out of 11 in importance, while investment philosophy comes second, Cerulli’s European Fund Selector 2014 Report shows.
Fund selectors rarely mention the size of a fund as a decisive selection factor. “Fund size is impor tant in thesense that a fund should not run the risk of closure, which can impact its performance. But in that way, it only serves as a de-selection criterion,” says Allan Møller (photo), head of fund selection for Danske Capital.
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Unique selling point
European fund selectors unanimously name investment process and philosophy as some of their most important selection criteria. “We attach a lot of value to the unique selling point of a manager”, says Thomas Romig, head of multi-asset management at Union Investment in Frankfurt (read the whole interview with Mr Romig here).
Jaap Bouma of Optimix in The Netherlands makes a similar point: “We like funds which are specialised, in terms of employing a specific strategy or a focus on a particular sector.” (read the whole interview with Mr Bouma here)
Overestimation
Special characteristics of a fund, such as availability of different share classes, and ‘branding and marketing support’ are two other criteria that are slightly overestimated by asset managers. In their eyes, they are of medium importance to fund selectors, while they feature at the bottom of the fund selectors’ ranking.
“The availability of share classes is less important for us. We have no problem using euro or dollar share classes, even though we are based in Denmark”, says Møller of Danske Capital. “Marketing is important in the sense that it raises our awareness of funds in the market. But when we start a search for a fund, we pay no attention to brands but start from scratch.”
