Our reputation is built on our fund rating process and methodology. All the funds on our rated fund list have been put through the full screening process and create the universe from which we select funds for use in our portfolios, including the new Active 2-10 range.
In each investment sector we look at a range of performance and risk measures. Funds that display attractive performance and risk characteristics are taken forward for further analysis.
Quantitative and qualitative measures are then used to ensure that a fund’s performance and risk statistics have been produced by a robust investment and risk management process from a strong, skillful fund manager and team. These factors combine to produce a picture of how a fund may perform in the future.
We look at statistical risk measures to further understand funds and how they operate. We consider funds in relation to their benchmark and sector and also in relation to their objectives. Specifically, we evaluate volatility, Sharpe ratios, information ratios, value at risk, maximum loss and maximum drawdown and measure each fund against its peers and an appropriate benchmark in order to identify funds performing in line with expectations.
The charges taken by the fund manager can impact substantially on a fund’s returns, particularly in low return and falling market conditions. We use the ongoing charges figure (OCF) as our preferred measure and look for funds to have an appropriate OCF based on their asset class exposure, aims and objectives and investment strategy.
When we identify a fund that requires more in-depth analysis we will issue a detailed fund questionnaire for completion by the fund management team which covers all the main areas that we feel require detailed investigation and we set up meetings to fully assess the management team and their investment philosophy.
Where a fund looks attractive from an initial research standpoint, we then move on to screen the fund from a qualitative perspective, enabling us to look in detail at how a fund operates and how robust the investment process is.
Monitoring of the fund lists and the procedure for making changes are crucial and decisive parts of the ongoing process. The investment sectors and their rated funds are reviewed formally on a rolling three-month basis and in the case of funds that are already rated, we monitor the performance and risk information to make sure that funds are performing and behaving as we would expect, given the prevailing market and economic conditions.
Click here to access and download our full fund rating process and methodology.
This information is for UK Professional Advisers only and should not be given to retail clients.The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested.
Rayner Spencer Mills Research Limited is a limited company registered in England and Wales under Company Registration Number 5227656. Registered office: Number 20, Ryefield Business Park, Belton Road, Silsden, BD20 0EE. RSMR is a registered trademark.