The director of Rayner Spencer Mills Research revealed his firm has launched a rating service for multi-asset fund ranges looking at “families of funds” that share a common investment strategy, fund process and cover a range of risk profiles.
The ratings determine whether a fund range warrants RSMR’s stamp of approval through examination of a number of criteria including the fund management team, investment process, risk controls, resources and performance.
The firm has also launched a ratings service for socially responsible investment funds.
Mr Mills said: “When we launched in 2010 we had a no-nonsense, pragmatic approach to fund research and ratings. We believe a fund should either be rated or not and we have repeated that approach for these two launches.”
The SRI fund rating provides advisers with an independent view of an SRI fund’s investment strategy, management style and dominant SRI characteristics such as a focus on environmental factors, sustainability and clean technology.
Both services are supported by a guide which includes fund factsheets. Mr Mills said: “The SRI ratings offer further support to financial advisers as green and ethical investments are increasingly being embraced by pension funds, insurance products and ISAs.”
He added that the extension of RSMR’s ratings to new sectors was driven by feedback from advisers that clients found star ratings confusing, always choosing five star funds when this wasn’t necessarily the most appropriate fund for their needs.
He said: “We think this is why it’s more important to provide qualitative analysis.”
David Crozier, managing director of County Down-based Navigator Financial Planning, said: “We don’t use fund ratings at all as we think they’re a bit of a waste of time. A top rating when you look at it a couple of years later has absolutely no correlation to how the fund has performed so we steer clear of them.”