A helping hand from numbers leads to objective opinions and confident decisions!!!

Here I checked how a portfolio of active mutual funds fared against passive index fund – for 1 year horizon. But such short horizon analysis is not a very good way to make long term investment decisions. Going to 10 year horizon now. Selection criteria remains same as earlier. Just reproducing here for ready reference: -           All Large cap funds, excluding index or ETF for April 2002 – March 2012 -           Minimum / maximum AUM: None whatsoever. We don’t want to be biased towards small or large funds -           Top 5 funds, basis only one criterion – “Returns” shortlisted. We are keeping it simple!!! No complex risk parameters like Sharpe ratio, Treynor ratio etc -           Funds allocated in equal proportion to all 5 funds. No bias again!!! -        ...

Assume you have decided to put money in equity mutual funds. This begets another question: be a DIYer or go through a professional (RIA, distributor whatever)? Any choice one makes, this will lead to another dilemma – how do you or the professional choose that killer fund (manager) which will deliver the significant excess ROI over your “safe” fixed income investments. Once could have taken in easy and gone for Index funds. But these never come into picture for most people. High decibel marketing for active funds keeps index funds in the shadows. Circling back to question of utmost importance – how to shortlist, say 5 “best” equity funds to deploy the capital? One will, as most people do look to the best free advisor in the world – google for answers. This will lead you to some mutual fund rating websites. Apply some easily understandable filters and one will have shortlist of “best” performing funds. But some with higher analytical bent of mind will go further – they will look for...