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What sort of a Sri Lankan fund should I be looking for?

Most of us probably won't pay too much attention to the structure of the fund we invest in. We are, rightly, more concerned about whether it will make money for us. If the general market is rising, tracker funds will rise as well. They outperform average human fund managers because their costs are lower. In a falling market index trackers fall with the market while real live fund managers may at least attempt to do better.


What an active fund manager does is try to pick stocks that are going to do better than their competitors. This is called not surprisingly stock picking and stock picking came back into fashion in the more volatile markets of recent years.


Other classifications of funds that you may wish to consider are income funds and specialist sector funds, investing in specific business areas. Income funds, as the name suggests, focus on providing an income and look to invest in shares that pay good dividends. Obviously, companies that continue to make profits and pay dividends when times are tough will weather a downturn better than so-called "growth stocks" whose valuations rely on future prospects rather than current earnings. Among specialist sectors you may choose to focus on investing in are property, energy, finance, mobile and so on in Sri Lanka.


If you are looking at investing in shares, the key question is whether you feel qualified to pick winners on your own or whether you want a fund manager to attempt it for you.


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