Feb 11
Questions to Ask of Active Manager
When you meet an active manager who wants to manage your funds, here are a few pointed questions to ask?
- How many of your portfolios are performing better than the VTSMX index? VTSMX is Vanguard’s Total Market Index Fund.
- What software do you use to calculate portfolio performance and benchmark performance? Does the software account for cash flowing in and out of the benchmark in the same manner it does for the portfolio?
- What risk is involved in the portfolios you are managing?
- How well diversified is the portfolio? What asset classes does it cover?
- Are you involved in emerging markets, international equities, bonds, and commodities?
- How long have these portfolios been in operation?
- If you are managing 20 portfolios, what percentage are outperforming the benchmark?
Listen to the answers carefully and make sure you are receiving straight answers, not smoke screen types of answers. I assume most folks reading this blog are doing their own investing and if so, can you answer those questions? If not, why not? Are you interested in learning how to construct and manage a portfolio so you can answer those questions? If so, you have come to the right spot.
Lowell Herr
Photograph: Glass at Elan Gallery & Gifts – West Linn, OR
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