When trying to select a good fund, the performance record may seem to be the obvious thing to evaluate. But, as hopefully most investors realise, past performance is no guide to future returns. A good fund does need to beat its benchmark, sector peers and the wider market over the long term, but an important driver of any active fund's return is who manages it, so choosing a good fund manager is a key part of choosing a good fund.
But a fund manager's record may not be the same as the fund they currently run if they have recently taken it over, and there are also times when good fund managers will underperform - no one gets it right 100 per cent of the time. This means it can be more relevant to judge a manager by what they set out to achieve for you going ahead, rather than by the returns they make in any given year.
So choosing the right fund manager means first of all establishing what their investment style is and how they run their funds. There are a number of very different approaches to stock selection and this will have an impact on when they are likely to outperform their peers and sector.