“On the XXXX database, this fund is in the 1st decile over one year, three years and five years. What about over ten years? It’s impossible to compare – there aren’t enough funds. It’s a huge company, so there’s no risk if it loses value, I won’t get blamed for it... I’m buying it.”
Fund selection is a financial decision, just like buying a share, a bond or any other security. It involves both a real act of decision- making and making an investment. It becomes even more complex if you incorporate due diligence into the selection process.
Beyond the due diligence aspect, which we will not address in this study, selecting a fund requires advanced knowledge of quantitative analysis, because performance alone is only the small, visible tip of an enormous iceberg.
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