Page 8 - FWP Wealth Adviser Newsletter - May 2025

ISSUE 111
MAY 2025

THE ART AND SCIENCE OF

FUND MANAGER SELECTION

BALANCING PHILOSOPHY, PERFORMANCE,

AND INVESTOR RESILIENCE depositphotos.com

BY WEALTH ADVISER comprehensive guide for investors seeking to balance these
dimensions and build resilience in their portfolios.
Introduction: The Importance of Choosing the
Right Fund Manager The Science: Quantitative Analysis and
For Australian investors, selecting a fund manager is one Performance Metrics
of the most consequential decisions in the journey toward Long-Term Performance and Consistency
financial security. The right manager can help navigate The foundation of fund manager evaluation rests on
volatile markets, safeguard capital, and deliver consistent quantitative analysis. Investors are naturally drawn to
returns, while the wrong choice can erode wealth and con- numbers-returns, volatility, and risk-adjusted performance.
fidence. As Firstlinks succinctly puts it, “Choosing a good Morningstar Australia emphasises that “strong stewardship
fund manager is one of the most important investment deci- and an investor-first culture” are essential, but so too is
sions you’ll make”. In an era marked by market uncertainty, a proven ability to deliver results over time. However, as
technological disruption, and shifting investor expectations, Firstlinks cautions, “A good track record is necessary but not
the process of manager selection demands both rigorous sufficient”. A manager’s past performance must be assessed
analysis and nuanced judgment. in the context of market cycles, investment style, and the
This article explores the dual approach required for effec- risks taken to achieve those results.
tive fund manager selection: the science-quantitative anal- The Inside Adviser warns against “chasing recent perfor-
ysis, performance metrics, and risk management-and the mance,” noting that short-term outperformance can be the
art-philosophy, trust, and qualitative assessment. Drawing result of luck, market anomalies, or excessive risk-taking
on insights from Firstlinks, Morningstar Australia, and The rather than skill. Instead, investors should examine returns
Inside Adviser, as well as external research, we present a across multiple periods and compare them to relevant

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