Investment Trusts  

Defaqto launches investment trust ratings

Defaqto launches investment trust ratings
 

Defaqto has launched a diamond rating for investment trusts after seeing an increase in consumer demand for the products during the pandemic.

The business launched the service last week, which gives investment trusts a rating of between one and five depending on their risk-adjusted performance, as well as the trusts’ relative cost, scale and manager longevity.

Patrick Norwood, investment consultant at Defaqto, said the addition of trusts was the company’s initial response to the “well-documented” increase in consumer demand during the pandemic.

Historically, there hasn’t been information made available specifically for advisers, making it difficult to see where an investment trust sits within the market,” he said, adding Defaqto will add investment trust reviews within 12 months.

The new diamond rating will also cover:

  • Absolute return funds
  • Risk focused funds
  • Risk targeted funds
  • DFM MPS (direct) portfolio groups
  • DFM MPS (Platform) portfolio groups
  • Multi-Manager return focused funds across the four relevant IA sectors (mixed investment 0-35 per cent, 20-60 per cent and 40-85 per cent) and mixed investment
  • Single-asset return focused funds (across UK equity, European ex-UK equity, North American equity, Japanese equity, developed Pacific ex-Japan equity, emerging market equity, global equity, UK government bonds, UK corporate bonds, and UK index linked bonds)
  • Index Trackers - ETFs and open ended funds
  • Income funds (multi-asset, equity and bond)
  • Workplace pension default funds

At the end of last year, experts warned the merger of two investment trusts was a wake-up call for poorly performing open-ended funds.

Kyle Caldwell, collectives specialist at Interactive Investor, said investment trust boards were becoming increasingly proactive but there was little evidence of this happening in the funds industry.

“If you can’t compete, it’s time for a fresh approach,” he said.

sally.hickey@ft.com