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How to choose a good Fund Management Company in Sri Lanka?

There are several fund management companies operating in Sri Lanka. To choose a good fund company, investors need to inspect the following areas before making any decision.

Company’s strengths and weaknesses
This includes deep financial background, a solid strength of the shareholders.

System of standardized operation and management
Fund companies need to disclose information relating to comprehensive, accurate and timely fund statistics.

Technical Excellence
Look at the fund companies to ensure whether they possess relevant technical capability. It’s unlikely that the regulators grant permission to carry on their fund management business if they don’t possess the relevant capabilities. However, be sure of who you are working with.

Your understandability matters
Teach yourself to read fund management company’s financial accounts and become reasonably proficient at analyzing them. Another thing is to read these notes to the accounts very carefully as vital information about a company can be hidden in these notes. Read the management’s original statements and put particular weight on what is said in a market listing or share-issue document as every statement has to be independently verified.

Companies are scored on a financial health rating of 0 to 100 with 100 being the strongest. It is very unusual for companies with scores higher than 25 to experience financial distress.

Market performance of the Fund’s sustainability
Look not only at a particular company’s products and a short-term performance. You should also study the management of a company’s performance with other competing funds in the market to get the best deal. If you can compare these funds together on one sheet, it will give you a better picture and useful comparative information such as investment restrictions, first year performance, last three year’s average performance and fund management fees etc.

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