Partnering with Professional Managers
If you prefer not to invest large sums on your own, partnering with professional mutual fund managers is a smart choice. Here's how to find great mutual funds and recommendations based on our research.
What Are Mutual Funds?
A mutual fund is a simple way to invest your money without having to pick the individual investments yourself.
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When you invest in a mutual fund, your money is pooled together with others who also invest in the fund. An individual or a team of professionals manages this pool of money according to the fund's stated objectives and the manager's own personal philosophy.
You pay these professionals to manage your money through a fee, and in return, you hope that they can generate a satisfactory rate of return on your investments.
When Should You Invest in a Mutual Fund?
For most people, the answer is simple: almost everyone should likely have a large portion of their net worth invested in a high-quality mutual fund.
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Why? Because long-term financial goals—like retirement, buying a home, or building financial security—are very hard to reach by only saving cash. Over long periods of time, investing in well-run businesses has historically been the best way to protect your money from inflation. Cash left sitting in a savings account slowly loses purchasing power each year as everything around you gradually becomes more expensive. Investing is, therefore, not an option — it is non-negotiable, as it is crucial to protecting your standard of living over time.
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Mutual funds make this possible — even if you know very little about investing in stocks. Professional managers monitor and adjust your investments for you. For most long-term investors, this is a often the best way to participate in the growth of the economy and protect their standard of living over time.
So Why Don’t More People Do It?
The short answer: fees and fear of underperformance.
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Over the last decade, many investors have been told the smart move is to buy a low-cost index fund and avoid paying a 1–2% management fee per year for a great mutual fund. And in theory, this is correct – higher fees do have an impact long-term.
However, the greatest threat to long-term returns is rarely fees. It’s behavior.
Index funds are excellent tools — if you:
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Choose the right index (asset class & geography)
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Have an extremely long-time horizon (25 years plus)
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Stay invested and increase your position during market crashes
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Are comfortable investing most of your net worth in an index
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Are capable of controlling your emotions for decades
That’s harder than it sounds; and most people overestimate their emotional discipline.
With mutual funds, you still need to:
• Choose the right fund with a disciplined, proven manager
• Have a long-term horizon (10+ years)
• Stay invested — and add when your fund is temporarily down
But here’s the key distinction: you’re working with a professional whose full-time responsibility is managing capital. An experienced manager operates within a defined investment philosophy, supported by research resources and a team focused on evaluating businesses and managing risk. Many invest alongside their clients and are accountable for long-term results.
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Rather than reacting to headlines, they focus on owning high-quality businesses purchased at reasonable valuations. During periods of market stress, this approach can allow a manager to reassess opportunities and allocate capital selectively where valuations become more attractive.
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For some investors, that active oversight and selectivity provides reassurance — particularly compared with owning a broad index that includes every company in the market, regardless of quality or financial strength.
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Great active managers won’t outperform every year. In fact, the best managers often:
• Lose less when markets fall
• Gain slightly less when markets surge
• Prioritize steady compounding over volatility
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That steadiness matters more than most investors realize. As you can see in the chart above, avoiding deep losses is one of the most powerful drivers of long-term outperformance. In the chart, both funds earn a ten-year average rate of return of 9 percent on paper. One fund is steady, the other has great volatility in its returns. The portfolio that falls less in bad years doesn’t need extraordinary gains to recover. Over time, that discipline compounds in a meaningful way and leads to significant outperformance. It is boring and unexciting performance that leads to outperformance - not the other way around.
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For many investors, partnering with the right mutual fund manager isn’t about beating the market every single year. It’s about staying invested, compounding steadily, and reaching their financial goals with fewer self-inflicted mistakes.
Not All Mutual Funds Are Created Equal
The second reason people choose an index fund today is simple: most actively managed mutual funds fail to outperform their benchmark over long periods of time.
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Globally, there are tens of thousands of mutual funds to choose from. The latest long-term data shows that roughly 80–85% of actively managed equity funds underperform their benchmark over a 10-year period. That means only 15–20% outperform over a full decade.
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In other words: If you randomly select an active mutual fund, the odds are high that it will underperform a comparable index fund over time. Most active management does not add value after fees.​
These statistics tell us two important things:
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Simply buying any mutual fund is not enough. 2. Selectivity matters — enormously.
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The challenge is identifying the minority of managers who consistently execute with discipline, manage risk intelligently, and compound capital at superior rates of return over long periods of time.
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That’s where thoughtful research becomes essential. As a general rule, the more “efficient” or “mainstream” the market (like large U.S. stocks), the harder it is for managers to consistently beat the index. In less efficient areas (companies that are smaller or located in niche geographies), skilled managers have more room to add value—but the risks and dispersion of outcomes are also higher. This can be seen in the chart above.
How to Pick a Great Mutual Fund
Finding a great mutual fund is part art, part science—but it’s possible if you know what to look for. Use this checklist when navigating the vast sea of funds:
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If the fund's top holdings are the most popular and/or largest stocks of the day (like Apple, Amazon, Netflix, Facebook or Google are today), always pass.
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Most mutual funds that you come across will have some or all of the big flashy names in it, usually in their top 10 holdings. This is precisely why they underperform long-term. Managers of these funds typically buy into the hottest stocks — not because they represent the best long-term opportunities — but because they’re afraid of falling behind their competition. They are incentivized —and only keep their jobs — if they deliver comparable performance to their benchmark. Therefore, they look and act the same as their benchmark, rather than think and act independently. That kind of herd behavior isn’t what we’re looking for in our professional managers or from the company that offers this fund. We want managers that are enrcouraged to think, act and look different from their peers and from the index, becuase this is the only way to deliver superior long-term performance. By removing any mutual fund that has even one of the most popular stocks of the day in its top 10, at least 75% of all mutual funds you screen through will be excluded from your opportunity set.
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Ensure that the fund has a broad mandate. This means that the professional manager that you hire is allowed to invest anywhere geographically, in any size stock (small cap, mid cap and large cap), and does not have limits on the percentage of the fund that must be invested in bonds.
You want a manager who has the flexibility to go where the best opportunities are—not one who is boxed into a narrow corner of the market. This flexibility matters because markets change. The best opportunities won’t always be in U.S. large-cap stocks, and they won’t always be in the same sector or region. A manager with a broad mandate can shift capital as conditions evolve, rather than being forced to stay fully invested in an area that may be overvalued or out of favor. You’re hiring judgment — give that judgment room to operate. This is again a simple screen – you can see the fund’s mandate in its fund facts document, which you can easily find online. If the mandate says anything other than global equity fund with flexibility to hold cash and buy fixed income when appropriate, remove this mutual fund from your list. This will likely reduce your list by another 15 to 20%.
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Don’t invest in mutual funds that overcomplicate things for complexities sake.
While you are reading the fund facts document of a mutual fund and all you see are terms like Alpha, Beta, Sharpe Ratio, Standard Deviation and Variance, hard pass. These types of mutual funds are spending too many resources focused on the wrong things that add virtually zero value. A great mutual fund does not care what its Sharpe ratio or Beta is – they care about the number shown in the column that says 10-year performance.
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​Buy mutual funds that own stock in companies that you have never heard of.
If the top ten holdings listed on a mutual fund’s fund facts sheet are all companies that you have never heard of before – this is a major green flag. Better yet – since you have begun learning how to invest in stocks using the resources from Gingernomics – if you study some of these names and it is not clear to you why the manager purchased these businesses in the first place, this is the sign of a great manager. They are in obscure areas, buying into businesses that nobody else is because they know that here they have an edge. You have to be and look different to achieve superior results – this is precisely what we are looking for.
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Look for consistency in past returns, not flashy boom-bust performance.
First, check that the manager of the fund has been the same over the past ten years. If they are, it is a great sign that they are competent, compensated the right way, and have the skills and expertise required to deliver pleasing returns. Next, check the fund's yearly performance over each of those past ten years. Ideally, we want to find managers that have less lumpy annual returns and more steady performance. This is much easier said than done – there will always be bad years for the broader stock market and for the mutual funds in question. However, there are some phenomenal managers who are focused on not losing your money, rather than making you as much money as possible. They always outperform in down markets and gain less when markets are hot.These are the hardest managers to find but are by far the best at what they do. This is because they understand that money compounds at a better rate through steady performance. These are exactly the type of managers that we want to partner with long-term.
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Look for a relatively concentrated, not overly diversified portfolio.
On the fund facts sheet, a mutual fund will list the number of holdings that it currently has in its portfolio. The lower this number is, the better. If a mutual fund has 200 stocks in it, 99% of the time its performance will be average or worse. You would be better off dollar cost averaging into an index rather than owning these types of funds. A great mutual fund has a concentrated portfolio. The sweet spot is somewhere between 20 and 35 names. It would be alright to invest in a fund that has up to 60 different holdings, however we would not to go any higher. Our personal preference is 35 or less. This allows you to enjoy a more than adequate level of diversification, while the manager is focused on investing your money into only their very best ideas.
Putting It All Together
Chances are, there will come a time in your life where you will have to choose from a list of offered mutual funds for your company pension plan. Or maybe, you know that you need to start investing in a great mutual fund from an early age to let compounding work its magic for you. Whatever the case may be, when it comes to picking a great mutual fund, you now know to:
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Invest in a fund with a global mandate, giving the manager freedom to select companies of any size, from any region, with up to 100% allowed to be invested into equities
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The fund is concentrated, with less than 60 holdings, of which none of the top ten are flashy names
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In today's environment, the fund should likely be a 100% equity fund, regardless of your age
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The same manager has been running the fund for the past ten years. Their performance has been relatively smooth, with great outperformance when the stock market has had down years. In years where the stock market is up big, they are also up, but usually not as much. Prioritize managers that have had few losing years and relatively smooth returns
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When you look up the manager online, you see commentary about them being long-term business owners and not somebody whose fund has generated strong Alpha with a low Beta
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When you find a fund with a manager that meet these criteria, buy this fund and this fund only. You do not need to find three mutual funds that meet these criteria to succeed.
Our Recommendations
These are professional recommendations based on over thirty years of collective experience. We are not paid in any way to present these companies or their managers - they are simly the best of the best.
Edgepoint Wealth Management
Best-in-class money managers with a team of founders that are exceptional at what they do. They are truly one of the only mutual fund companies on the planet that puts your interests as their investors above their own.
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Across all of their funds, they apply the same approach. They are long-term investors in businesses and view a stock as an ownership interest in a company. With each investment, they aim to acquire these ownership stakes at prices below their assessment of their true worth.They believe that the best way to buy a business at an attractive price is to have an idea about the business that isn't widely shared by others. They look for positive changes inside a business before they become obvious to others.
You cannot go wrong dollar cost avergaing into their Global or Canadian Equity funds. By doing so regularly, you are all but guranteed to reach your long-term financial goals. Their quarterly articles are the perfect mix of fun and equcational. Read them if you want to improve how you think about the stock market.
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Learn More:
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Fidelity Investments
Fidelity is a global powerhouse and is one of the largest asset managers in the world. Chances are, no matter where you live, you have heard of them and have access to their funds. They have access to the best talent in the world and they have a wide variety of mutual funds to choose from.
Of all their superstar managers, our preferences are:
Dan Dupont (Concentrated Value Private Pool and Canadian Large Cap funds), who is perhaps the best on the planet at never losing money and delivering stead growth. If you can invest in any of his funds, this should be your first choice.
Hugo Lavallee (Canadian Opportunities and Greater Canada funds) is another stand out manager, who invests in out-of-favor Canadian value stocks that have global exposure.
Steve MacMillan (Small Cap America Fund) - who invests in small and mid sized American stocks - is also a great steward of your wealth.
Learn More:
Fidelity Investments
Dan Dupont
Hugo Lavalee
Steve MacMillan
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