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Crown Ratings Rebalance January 2018: Find out what's changed and how the ratings can help you

By Kaavya Dijendranath

The FE Crown Fund Ratings are rebalanced twice a year. The first rebalance of 2018 has given 324 funds the highly-prized five FE Crowns Rating, of which 15 are newcomers and 54 have jumped two or more FE Crowns to achieve the top accolade. The funds are spread across sectors with all the IA sectors seeing some churn in the ratings of their funds - 45% of funds within the universe (a total of 1345) have gained or lost FE Crowns at this rebalance.

The IA Japan sector emerged as champion with 45% of the sector's funds receiving a 4 or 5 FE Crown Rating and 37 of the 56 funds being upgraded since the last rebalance. Joining Japan, other sectors that have had a strong showing this rebalance include China and Asia Pacific ex Japan with 41% of funds in each receiving a 4 or 5 FE Crown rating.  An impressive 50% of funds in the Europe ex UK sector are 4 or 5 FE Crown rated and 28% are 5 FE Crown rated. Similarly, Global Emerging Markets has fared well with 40% achieving 4 or 5 FE Crowns. Conversely, the IA UK Equity sector saw a total of 44 funds being downgraded and only two funds were rated with the full five Crowns.  Many well-known funds in the sector have suffered with LF Woodford Equity Income seeing the five FE Crown Rating it was awarded just six months ago fall to one. Rathbone Income and Trojan Income have also seen slips in their FE Crown ratings - from five to two.

Looking at outright numbers of 5 FE Crown rated funds, Old Mutual Global Investors  - who were in first place at the last rebalance - now share their top spot with GAM.  The two firms are tied with 11 FE 5 Crown rated funds each.  This rebalance marks Baillie Gifford’s first entry into the top three having previously occupied 15th place in July 2017.    

There are 54 funds upgraded by two or more FE Crowns to achieve the top accolade of 5 FE Crowns this rebalance and a third of these are fixed income funds.

How can these ratings help Advisers and Planners?

Intermediaries can access the ratings via FE Analytics or on factsheets on FE Trustnet. 

We believe that quantitative ratings have an important role to play in supporting accurate and fair comparisons of historic performance.

FE Crown ratings are calculated by building up a ‘crown score’. The score is made up of three parts, and each part is calculated by reference to a benchmark for the fund. Once the benchmark is assigned, we then apply three tests (an alpha based test, a volatility score and a consistency score) to the total return history of the fund. Three years of history is required to carry out these scores, so any fund with less history than this will not qualify for a rating.

Funds are assigned ratings based on their total scores, according to the following distribution:

  • the top 10% - 5 FE Crowns
  • the next 15% - 4 FE Crowns
  • the next 25% - 3 FE Crowns
  • the next 25% - 2 FE Crowns
  • the bottom 25% - 1 FE Crown

No matter what your investment style is, the extensive due-diligence undertaken to create the list can add significant value to your proposition.

If you build client portfolios or models: For many Advisers who use FE Analytics, the Crown Fund Ratings are a robust metric for investment selection. The filter tool on the system allows your to sieve through the IA universe to select funds with a four or five rating. In other words, in a matter of minutes you have selected a range of funds that have a strong performance history. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Crown Fund Rating can be included in reporting for clients or compliance as a symbol of the validity of your research and investment selection.

If you outsource:  You can also access the ratings through FE Invest, FE's risk-optimised suite of model portfolios. As high conviction 10 fund portfolios - we select funds after careful scrutiny and their Crown Fund Rating is a key element of this scrutiny. The FE Approved Fund List which is a shortlist of funds upon which the models are based, looks at the FE Crown Fund Rating, alongside our other ratings i.e. FE Alpha Manager, FE AFI and FE Group Ratings to qualify funds.

Free from bias:
The FE Crown Fund Rating is free from any bias. All the funds that fall within the IA universe that have the required history are included in the calculations and analysis. Asset Managers only pay to use the ratings they have achieved but not to be rated. Our objective is to make the market more transparent and accessible, to truly help people be better informed.

For more information please contact us at enquiries@financialexpress.net

Asset manager questions/enquiries: namrata.nanda@financialexpress.net

 

 

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12 ways FE helped Advisers in 2017

By Kaavya Dijendranath

As everybody is getting into the festive spirit – we thought we’d use the 12 Days of Christmas song as inspiration to look at 12 ways FE has helped Advisers this year. It's been a busy year of new launches and additions to FE Analytics.  So why not grab a mince pie and scroll through our year in review...

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Introducing the FE Invest Responsibly Managed Portfolio Range

By Kaavya Dijendranath

The interest in responsible investing has recently increased manifold.

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21 Multi-Asset Funds Added to the FE Approved List

By Kaavya Dijendranath

We are pleased to announce that 21 Multi-Asset funds have today been added to the FE Approved list.
The latest addition will help Financial Advisers in selecting the best of breed Multi-Asset funds for their clients' needs.

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5 ways FE’s new end-to-end investment process can help your business

By Kaavya Dijendranath

You may have seen in the press recently, the team here at FE have launched a new product in response to client feedback. FE Analytics+ Investment Planner is the latest addition to FE’s award-winning Adviser proposition. The Investment Planner brings together FE’s data capabilities, the FE Risk Scores and dynamic reporting solutions to offer Advisers a complete end-to-end investment process from profiling a client's risk appetite and capacity for loss through to selecting and reporting the most appropriate investment options for an individual client's needs. 

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Client reporting under PRIIPs and MiFID II - For Advisers

By Kaavya Dijendranath

Written by Mikkel Bates, Regulatory Consultant at FE. First published at professionalparaplanner.co.uk.

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Investor pursuit of real returns highlights the need for Financial Advice

By Kaavya Dijendranath

Inflation in the UK hit a record high of 2.9% in May 2017 and is set to soar to 4% in the second half of the year as per forecasts from the National Institute of Economic and Social Research. Data from FE Analytics shows the upward trend in the UK Consumer Price Index and UK Retail Price Index over the last five years to 3.09% and 6.01% respectively (as at 10th July 2017).

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The Assessing Suitability Review: Investor Risk Profiling in Focus

By Kaavya Dijendranath

Last month, the FCA published the much-awaited results of its suitability study.
The review, having assessed 1,142 individual pieces of advice given by 656 firms against the suitability and disclosure rules in the Conduct of Business Sourcebook (COBS), found that in 93.1% of the cases the sector was providing suitable advice to investors. The regulator has called the results both positive and encouraging.

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7 Things to consider before partnering with a Discretionary Fund Manager

By Kaavya Dijendranath

With the increase in number of Discretionary fund managers and Model Portfolio providers in the market, Advisers face a proliferation of options to consider. When using discretionary models as a part of a Centralised Investment Proposition it is critical to undertake extensive due diligence on the providers as you will be embarking on a close working relationship based on trust to achieve the best outcomes for your clients.

The FCA uses the expression research and due diligence to refer to the process carried out by the firm to assess (a) the nature of the investment (b) its risks and benefits and (c) the provider. The firm needs to understand these factors in order to judge whether the solution is suitable for their particular client base. With this in mind, we look at 7 key areas to consider before partnering with a discretionary service provider.

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Measuring and managing investment risk Part 2

By Kaavya Dijendranath

In the previous blog post Measuring and managing investment risk: Part 1, we looked at the popularity of volatility as a measure of risk and how FE Analytics can help in effectively monitoring it. Although volatility is a common measure of risk, it comes with certain inherent limitations when forecasting future performance or planning for worst case scenarios; hence Advisers ought to be mindful of an overreliance on volatility as the primary source of risk evaluation and management.

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