Multi-assetMar 23 2017

RSMR launches DFM ratings

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RSMR launches DFM ratings

Ratings agency RSMR has extended its coverage to discretionary fund manager (DFM) portfolios in response to adviser demand for "additional clarity" from the space.

The firm has an initial list of six DFMs for its ratings process, with "more in the pipeline". These will cover a range of DFM services, from bespoke portfolios to unitised fund ranges.

Though ratings agencies tend to currently focus on fund houses, discretionary assets have enjoyed substantial growth in recent years.

According to Defaqto, these stood at £263bn at the end of 2015, up 19 per cent from 2013. Stockmarket growth over this period was much lower, suggesting the swell in assets came mainly from inflows.

However comparing DFM offerings on a like-for-like basis remains difficult compared with doing the same for funds, due to the bespoke nature of many mandates. RSMR said it  would primarily lean on qualitative analysis.

Ken Rayner, joint managing director at RSMR, said the extension of the firm's coverage came in response to "adviser demand for additional clarity in the selection and use of DFMs".

He added: "We have been assessing DFM services for a number of our clients for some time, and so have developed a robust methodology for use in this area. The nature of the DFM market means that a purely quantitative approach is not appropriate – obtaining relevant performance and risk data is difficult due to the bespoke nature of the portfolios.

"This makes our qualitative based approach all the more suitable, as we look in detail at how the managers run the portfolios, and base our assessment far more on this aspect."

The six DFMs covered by RSMR include Brooks Macdonald, Cazenove, Close Brothers, Rathbones, 7IM and Standard Life Wealth.