We all dream of finding the next Warren Buffet. But, skilled investors are rare. If you want to know if the person managing your money is skilled, the most important thing you should ask for is their track record. As surprising as this may sound, very few people in the investment industry can tell you their track record.
Mutual funds have track records, but managers do not. Out of almost 11,000 mutual funds, roughly 70% have changed their managers in the last 5 years. When this happens, the fund's long-term track record no longer reflects the skill of the current manager.
When you invest in a mutual fund, the person who will manage your money is the current manager, not the one that left. In our opinion, it's more than a little deceptive for a mutual fund to advertise a long-term track record if the manager who generated most of the returns is no longer there. If you don't know the current manager's track record, it's impossible to say whether the next Warren Buffet is managing your money, or someone who is at best unproven. And, there is no good reason to entrust your financial future to someone who is unproven.
We started Marketocracy to let managers, analysts, and everyone else establish their own track record so we could identify the skilled investors we all want to have managing our money. We do this through a website that enables anyone to manage a model portfolio that is priced each day as if it were a mutual fund. The big difference? The manager that started the fund's track record is the same one managing it today.
Since we started, more than 100,000 people have set up a model portfolio. There are now over 30,000 whose track records are more than 5 years old, and we have signed research contracts with about 500 whom we consider to be the most skilled. For an explanation of how we assess skill, click here.
The m100 and mFOLIO Masters
Out of the 500 members with whom we have signed a research contract, we select 100 whose skills we consider to be best-suited for the current market to be the m100. We select a 100 because it gives us room to be wrong on any individual m100 member, but still have confidence that as a group they will beat the market.
mFOLIO Masters are m100 members that we have evaluated enough that we believe their model portfolio can stand alone. You can find more information about the m100 and mFOLIO Masters by clicking here.
Since November of 2001, I've used the m100 to select and research stocks for the mutual fund I manage and for separately managed accounts through Marketocracy Capital Management, LLC. Regulations prevent me from saying much about the fund or the managed accounts here, but you can find out more by clicking here.