A Sensible Mutual Fund Selection Model

We present a rigorous framework for asset allocation and selecting mutual funds that takes into account the unique preferences and constraints of an individual investor. The framework is based on the analytic hierarchy process (AHP), and the model generates reasonable asset-allocation recommendation...

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Bibliographic Details
Published in:Financial analysts journal 2002-05, Vol.58 (3), p.60-72
Main Authors: Saraoglu, Hakan, Detzler, Miranda Lam
Format: Article
Language:English
Subjects:
Asset allocation
Asset income
Capital appreciation
Decision making
Financial economics
Financial investments
Financial planners
Financial portfolios
Growth funds
Hierarchies
Income taxes
Investment advisors
Investment decision
Investment policy
Investment risk
Investment trusts
Investors
Mutual funds
Portfolio Management
Portfolio selection
Sovereign debt
Stocks
Studies
Tax advantages
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Summary:We present a rigorous framework for asset allocation and selecting mutual funds that takes into account the unique preferences and constraints of an individual investor. The framework is based on the analytic hierarchy process (AHP), and the model generates reasonable asset-allocation recommendations and identifies the most suitable funds within an asset class. We include sample mutual fund selection for a hypothetical investor. A mutual fund selection model that uses the AHP framework is flexible, is user friendly, and ensures consistency throughout the portfolio decision process.
ISSN:0015-198X
1938-3312
DOI:10.2469/faj.v58.n3.2538