The 21 funds have been selected from FE’s own Risk Targeted Multi-Asset (RTMA) universe which enables investors to compare the burgeoning ranks of risk-targeted funds and to assess their returns in relation to the risk taken.
Rob Gleeson, head of research at FE said: “Risk Targeted Multi-Asset funds have soared in popularity with advisers over the past few years and fund providers are responding with a range of multi-asset products, providing more choice than ever. However, picking the best fund for a specific risk target is not easy. These 21 funds have been chosen based on a stringent methodology with five specific risk profiles in mind to support advisers’ investment propositions. Advisers using Investment Planner, our recently launched step by step investment process, can easily map these recommended funds into their models.”
The funds have been selected based on a methodology which mirrors that of the FE Approved list of funds, adapted to risk targeted requirements. It is based on three FE ratings: the FE Crown Rating, FE Alpha Manager Rating and the FE Group Award. Each fund in the RTMA universe has been mapped to a short, medium and long-term risk level, based on its FE Risk Score.
Amandine Thierree, portfolio manager at FE said: “We’ve applied filters to ensure the shortlisted funds are widely available on leading UK platforms and checked their liquidity to assess the risk of the fund range closing. We have also interviewed the investment teams to assess the robustness of their proposition and to question the processes in place, particularly the risk management side because it is essential that risk boundaries are respected.”
The recommended funds are managed by six asset management groups; Architas (six funds); Standard Life Investments (five funds); HSBC Global Asset Management (three funds); Rathbone (three funds); Legal & General (two funds); and Premier Asset Management (two funds).
Thierree continued: “We looked both at fund ranges and individual funds, applying our quantitative methodology and overlaying it with interviews with fund managers. Standard Life Investments’ MyFolio funds received the highest Group Score and are best suited at the low to medium risk profiles.
“Excellent tactical asset allocation led us to score Architas’ passive range highly and they also have the largest coverage of the risk spectrum with good options for risk band one through to five. The three HSBC funds are also from their passive range and are all 5 FE Crown rated. L&G’s and Premier’s funds are all well suited to the lower risk levels - L&G have great downside risk management due largely to their accurate house views and scenario analysis and Premier’s active fund range has very strong manager selection skills. Rathbones’ approach to risk is a bit different with asset classes clustered by similar characteristics and their level of correlation toward equities. The process is tried and tested and is very good at both the low and high-risk levels.”
Notes to editors
FE is a leading provider of data, software and performance analytics to the financial services industry. FE’s products and services are designed to interpret and analyse data, helping financial advisers and investors stay well informed and ultimately make sound investment decisions. FE also provides tools and software for fund managers and other financial services firms, including products to assist with fund reporting and analysis as well as fund marketing and presentation materials. FE has offices in the UK, Europe and across Asia Pacific. Its clients include life and pension providers, asset managers, financial advisers and networks, wrap platforms, fund supermarkets, software houses, and financial portals.
For more thorough information about the methodology please contact us.