If you’ve ever looked at your investment portfolio and wondered, “How on earth did these funds get here?”, rest assured—it’s not random, and it’s definitely not guesswork. At GSI Wealth Management and Mitchell & Mitchell Asset Management, our clients’ portfolios are built on a robust and consistent selection process that combines hard data with human insight.
This is fund selection, the GSI way.
It Starts with the Investment Universe
There are over 3,000 UK-regulated funds available to retail investors at any given time. That’s before we even consider ETFs, investment trusts, or global offerings. Our first task is to narrow the field.
We filter based on structural criteria:
- UCITS-compliant only (regulated, transparent, and suitable for retail investors)
- Domiciled in the UK, Ireland or Luxembourg
- Minimum fund size (for liquidity and trading efficiency)
- Charges – we look closely at ongoing cost figures (OCF) and ensure clients aren’t paying over the odds for performance that can be accessed elsewhere
From there, we classify by asset class, style (value, growth, blend), and region, then map potential additions against existing holdings. This ensures that the final mix isn’t just individually strong, but diversified and complementary.
Then Comes the Quantitative Analysis
Numbers matter—but not in isolation.
We use a suite of metrics to dig beneath the headline returns and test whether a fund has genuinely earned its place:
- Sharpe Ratio – Does the fund deliver good returns relative to the risk it’s taking?
- Sortino Ratio – Does it manage downside risk well (not just volatility)?
- Alpha – Is the fund outperforming its benchmark, or just drifting with the market?
- Maximum Drawdown – What’s the worst-case scenario historically, and how did it recover?
- Rolling Returns – Are the results consistent, or dependent on one good year?
We also model how a fund might behave within a portfolio context—its correlation with other assets, its potential to smooth volatility, and its behaviour in stress-tested scenarios (e.g. 2008, 2020).
But It’s Not Just About the Maths
Here’s where many investment processes fall short: they stop at the spreadsheet.
At GSI, we go beyond the numbers with thorough qualitative due diligence, asking questions such as:
- Who runs the fund—and how long have they been there?
- What’s the investment philosophy, and is it clearly articulated?
- Is there a repeatable process underpinning decision-making?
- How well does the fund house communicate with advisers and investors?
- What’s the firm’s culture around stewardship, ESG, and risk management?
Fund managers are human. Even the best strategy can falter if the people behind it leave or lose their discipline. That’s why we value manager tenure and stability, and prefer fund houses with a strong internal culture and clear accountability.
We meet with fund managers and analysts, attend webinars and manager briefings, and read quarterly commentaries. We want to know: do they practise what they preach?
Due Diligence Is Not a One-Time Thing
Adding a fund to a portfolio is just the beginning.
We hold monthly investment committee meetings to review all positions across our Compass and Atlas portfolios. If a fund’s performance starts to deviate from expectations—or if there’s a change in manager, style drift, or a sudden spike in costs—we investigate.
Some funds stay with us for years. Others are replaced more quickly if they no longer meet our criteria. We don’t chop and change for the sake of it, but we’re not sentimental either. Our loyalty is to the client, not the fund manager.
In portfolios like Atlas 60 Balanced or Compass Cautious, any change in allocation is carefully considered and backed by both data and committee consensus. Clients can trust that the portfolios are monitored, reviewed, and refined—not set and forgotten.
Why All This Matters to You
Fund selection is the engine room of portfolio construction. If the components aren’t sound, the whole vehicle becomes unreliable.
But here’s the real reason we go to these lengths: Consumer Duty. That’s not just a regulatory buzzword—it’s a principle we take seriously. Clients deserve more than yesterday’s winners or this year’s marketing favourites. They deserve durable, resilient portfolios aligned with their goals and risk tolerance.
And let’s be frank: most investors don’t want to read fund factsheets or trawl through performance metrics. That’s our job. Your job is to live the life you’re planning for—to enjoy the retirement you’ve earned, support the people you love, and sleep at night knowing your investments are being looked after.
So next time you see a fund name in your valuation report and think, “I don’t know who this is or why I own it,”—remember: we do. And we’re watching it closely.
Plan Well. Live Happy. Leave the fund picking to us.
Disclaimer
This content is for general information only and does not constitute financial, legal, tax, or investment advice. The value of investments can fall as well as rise, and you may not get back what you invest. Tax treatment depends on individual circumstances and may change.
GSI Wealth Management has been appointed as a distributor of services offered by Mitchell & Mitchell Asset Management Ltd, which is authorised and regulated by the Financial Conduct Authority (FCA no: 992402). GSI does not act as an authorised representative of Mitchell & Mitchell.
All views reflect GSI’s opinion at the time of writing. No personal liability is assumed by any contributor. We take care to ensure accuracy but accept no responsibility for loss from reliance on this material.
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