For our clients, there are many factors to consider when choosing money managers. Before making selections, clients should consider:
- Preferences from a financial standpoint: time horizon, tolerance for risk, expected returns, socially responsible considerations and any other exclusions.
- Tax implications: Kinds of accounts, a taxable as opposed to a tax-deferred portfolio, tax rates.
- Money managers’ abilities and resources.
Simply reviewing managers’ historical performance (absolute, risk-adjusted, relative risk-adjusted) is not sufficient. You will need to explore and consider:
- Tax implications.
- Holdings/turnover of the portfolio.
- Composite portfolio quality.
- Investment philosophy and process/style.
- Personnel/management.
- Client service.
- Performance consistency.
Links of interest: