The service, which will be available globally on the wealth platforms of Thomson Reuters, Lipper’s parent, aims to offer an “independent, forward-looking assessment of a fund’s key performance and risk attributes and consistency of longer-term returns, relative to peer group or benchmarks.”
Fitch says the service differs from traditional fund ratings, in particular backward-looking quantitative systems, by incorporating analysis of several factors. These include: the fund manager’s investment strategy and practices; the manager’s resource commitment; and benchmarking against longer-term, historical risk-adjusted performance, using Lipper and other data.
Ratings, which are assigned following on-site reviews and interaction with the fund management team, follow a six-tier scale. Established funds are rated from “excellent” to “inadequate”. Funds without three-year track records can be rated “qualifying”, based on a qualitative assessment of the investment process and operational set-up.
For a fund to be rated excellent, it must demonstrate “the highest proficiency”, strong resource commitment, and that it has delivered high, consistent risk-adjusted returns on a relative basis.
“There are over 35,000 funds available to investors in Europe alone and Ucits developments will amplify cross-border distribution,” said Aymeric Poizot, head of fund and asset management ratings for Europe, Middle East and Asia Pacific at Fitch. “Investors need clear, insightful analysis and research to help them navigate this maze of investment offerings.”
Fitch’s fund and asset management group consists of 40 analysts, who cover 70 asset managers and over 800 funds globally.
