Starting an Investment Plan(3)

Step 5: Funds Selection
As Financial Advisers, one of the thing we can do is to help select funds for our clients. There are hundreds of mutual funds in Singapore and it is a challenge to find reliable fund managers to be included in our portfolio. Other than the recommended funds from our i-fast and Navigators platform, I try to find out more about other funds as well if they deserve recommendations.

I will first get to http://www.fundsupermart.com/ website to download all the funds info by asset classes and geographical allocations. The usual ones I download are Equities: Global, Asia Ex-Japan, BRIC/Emerging Markets, China, Latin America, Bonds: Global, Asia, High Yields.

I’ll transfer the funds information to my excel spreadsheet and use a colour coding system for 4 criteria namely 1,3,5 years returns, Sharpe Ratio, Expenses Ratio and Fund Size to select up to 4-5 funds. For those without long term track record, I’ll check out its mother fund in http://www.trustnetoffshore.com/ for guidance.

With the 4-5 funds available, I’ll check out the Lipper Website http://www.lipperleaders.com/ to check out their Returns Consistency and Preservation Score. I’ll then check out the Morningstar website http://sg.morningstar.com/ to check out the Alpha, Beta, style box, PE and PB ratio.

On completion, 2 or 3 funds will remain in my respective portfolio and the same process of review will be conducted 6 months later.

Step 6: Review and Rebalancing for Clients
I’ll print all my clients statement and manually key in the returns into my excel monitoring system. I know exactly how much their equity allocation and return is as per beginning of each month. I also set alarm function into my funds monitoring system to inform me when my clients portfolio reaches specific profits or loss. When this happens, I’ll evaluate if action is necessary at that stage to review allocation or to rebalance. For some clients, I also set alarm function for specific funds where I’ll be prompted when it reaches certain price.

For my clients, I email them my views on the global economies every 1st week of the month. I'll try to email specific report to some clients on a quarterly basis and to meet up at least every half yearly or yearly. For those with smaller investments, the meeting shall most likely be on a yearly basis.

The process of Funds Selection and Funds review are very tedious processes. I hope I'll be able to engage a part-time staff to help me with these 2 steps in future.