The total expense ratio tops the list as the most meaningful fund selection criterion, with almost two thirds of survey respondents considering it very important. Risk-adjusted returned and risk-measures such as standard deviation come second, with 55% deeming those very important selection criteria and another 36% finding it somewhat important.
The track record: an Atlantic divide
Asset managers’ ‘overall strength’ (whatever that may exactly mean) only scores a little lower, with 45% attaching a lot of importance to it. Surprisingly, historical performance is valued much less, with only 18% deeming it a very important metric. This lack of historic interest among the Americans contrasts sharply with the general attitude of European fund selectors. Most of them consider the track record of a fund as the single most important fund selection criterion.
Source: Cerulli Associates
Oddly enough, American fund analysts appear to care more about the length of the tenure of a fund manager at a particular fund than about the past performance of that fund. The number of respondents classifying the former criterion as ‘very important’ is twice as high, at 36%.
