How does RWM select Mutual Funds and/or outside (private) portfolio managers?
We look for portfolio managers with consistent, long-term, excellent track records in a particular investment style. Typically, we like managers who are owners of a management company and who are not very good at marketing. What we mean by this is, generally we like to look for portfolio managers that do not have hundreds of millions or billions of assets annually being placed under their management. Portfolio managers, especially mutual fund managers, that are well marketed, attract too many assets that tend to hold down performance over time. For example, many of the Fidelity and Vanguard funds are large, bloated with assets, and invest in large stocks. Consistently, most of their funds underperform the S&P 500 which also invests in large stocks, especially over longer periods of time. It is very difficult for most managers to handle large amounts of assets. This is especially true of small stock strategies.
