The criteria used by mutual fund managers to select assets vary greatly depending on the individual manager.

So when choosing a fund, you should look at your manager's investment style and make sure it fits into your risk-reward profile.

"The way we invest is very important because of how the investment works," says Chris Geck, director of wealth management programs at The Wharton School of the University of Pennsylvania.

"Both the risk and the return are connected to the style. The portfolio theory that is currently running optimises different styles and balances compensation and risk. "

The following are common investment strategies of fund managers.


Top-down investment strategies include choosing assets based on large themes.
For example, if a fund manager expects the economy to grow rapidly, he may buy stocks as a whole.

Alternatively, managers may buy stocks in certain economic sectors, such as industries and high technology, that tend to get better when the economy is strong.

If a manager expects the economy to slow down, it may encourage him or her to sell stocks or buy stocks in defense industries like health care or consumer staples.

Bottom-line managers choose stocks based on the strength of an individual company, regardless of what happens in the economy or where the company is located.

"The biggest advantage of Top Down is that you're looking at the forest rather than the trees," says Mick Hayman, an independent financial advisor in San Diego.

This will make it easier to review stocks or other investments.
"When you're right, you're right," says Timrisky, chief investment officer at Solaris Asset Management in Bedford Hills, New York.

Of course, managers may be wrong about their big ideas.
And even if they are right, that does not mean they can choose the right investment.

"A good example is gold," says James Holtzmann, shareholder of Legend Financial Adviser in Pittsburgh.

"That would make sense if you were a top-down investor. But what if you are looking at gold mining stocks and the company bumps into the ground? Although it is advisable to invest in gold, certain stocks may be ready to collapse. "

Bottom-up managers benefit from a thorough investigation of individual companies, but the plunge in the market often leads to even the strongest investment.


The basic analysis includes evaluating all factors that affect your investment performance.

In the case of stocks, this means looking at all of the company's financial information, and it may involve meeting with company executives, employees, suppliers, customers and competitors.

Hey man says, "I want to analyse management and really understand what is the driving force of the company and where the growth is coming from."

Technical analysis involves selecting assets based on previous transaction patterns. You are looking at trends in investment prices.

Most managers want to know what will drive growth, so they emphasise fundamental analysis.
Investors expect, for example, that if a firm increases profits, the stock price will rise.
But basics are not always important.

"In this market environment, the market is very emotional, so fundamental analysis is not going well," says Holtz man.

"We have not changed our philosophy from focusing on fundamentals, but we can have a period when the market moves to technology."

Heyman sees strength in technical analysis. Because he believes that the price of the asset reflects all the information available for that asset.
The best managers use both basic and technology, he says

"If stocks are good fundamentals, they have to be stable to rise. Unless you rise, the market says you have to be wrong or you have to focus on something else. "


Comparison managers choose unfriendly assets. They decide the market consensus for the firm or sector and then oppose it.

Wharton's Geczy says that this conflicting style is generally consistent with a value investment strategy, which means buying undervalued assets on some statistical measure.

"In the long run, value has outpaced asset growth around the world, even though it is not true for a certain period of time," he says.

"An inverted approach generally rewards investors, but we have to choose the right asset at the right time."
Of course, the risk is the correct consensus, which causes the wrong manager to bet and lose.


As the name suggests, dividend funds will buy stocks with strong profitability and dividend payout.
Due to the stock market volatility over the past few years, many investors like the idea of ​​a fund that gives regular dividends.

"If the price goes down, at least we are getting a little bit of income," said Rus Kinel, director of mutual fund research at Morningstar.

"Retirement is a great way to supplement your income."
However, the recent popularity of dividend payouts has led some market experts to doubt whether they are currently overvalued.

Also, be careful of funds with very high returns. This can be a sign that companies are facing a downward trend with large-scale risks.

Most experts advise you to diversify your investment style.

"In the end, the way we look at things in a balanced way tends to reduce errors," Hey man says.

thanks for the  time .

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