Nancy Willard
Let's estimate 12000 unique mutual funds in our universe. Most are copycats, and charge too much given the lack of value added. Finding suitable funds to buy and hold is like looking for a needle in a haystack, but we find it worth the effort.
12000 FUNDS
We see no need to pay a sales charge, so by focusing on No-Load funds only, we can cut our universe to:
5000 FUNDS
We see no value in paying an active manager to do what an index fund or ETF can do, so by requiring low correlation to index benchmarks, we can cut our universe to:
500 FUNDS
We can then eliminate the funds charging too much in annual expenses vs. peer group, cutting our universe to:
100 FUNDS
We now have a manageable universe of funds in which we can assess governance, whether the managers eat their own cooking, and finally, performance.
At the end of this process, we end up with a list of 10-15 funds that we consider independent, shareholder-friendly, and capable of delivering strong performance over a 5-10 year period. We consider ourselves lucky to invest with such skilled managers in a fully transparent fund that offers daily pricing and liquidity.
