Mutual Funds: Following a Fundamental Research Process

The Edward Jones Mutual Fund Research team works to identify quality long-term investments to help you build a diversified portfolio as you work towards your financial goals.

The team includes 11 analysts, with most holding the Chartered Financial Analyst (CFA) designation. Each analyst is responsible for reviewing and making individual fund recommendations, which are then reviewed and discussed by the team.

Following a Fundamental Research Process
The team evaluates mutual funds using a process termed ‘The 4 Ps’. This process includes:

Performance – The team begins by analysing performance during multiple time periods. This enables them to understand how and why a fund performed the way it did. They also use advanced software tools to attempt to identify the drivers of the fund’s success.

The analysts frequently meet with fund company portfolio managers, analysts and management teams to evaluate the people, processes and portfolios.

People – Researching investment professionals involves:

• Evaluating key decision makers and their experience
  
  
• Understanding the resources available to help make decisions
  
  
• Evaluating their performance and financial incentives
  
  
• Understanding the organisational structure and culture of the firm

Process – Evaluating the investment process helps determine:

• How attractive investment ideas are identified
  
  
• Portfolio construction techniques
  
  
• Whether the investment process is repeatable over the long term

Portfolio – The team analyses the fund’s investments and the overall portfolio characteristics. Doing so helps to ensure that the portfolio management team manages the fund based on its stated investment objective and does not change its investment strategy.

The Mutual Fund Research team follows the same process for all mutual funds recommended, including those within pension and capital investment bond wrappers. For more information, contact your financial adviser for a copy of our Selecting Shares, Bonds and Mutual Funds: The Process Matters strategy report.