People & Process

Our Fund Lists

The funds featured within The Adviser Centre appear on one of the following three lists:

                                        

Recommended

                                        

Established

                                        

Positive Watch

Definitions

Recommended

“Recommended funds are actively-managed funds that we have assessed quantitatively and qualitatively and satisfy our thresholds with regard to quality and value for money.  Quality is defined as our assessment of a fund manager’s abilities, experience and resources in the context of a fund’s objectives.  Value for money is defined as our assessment of the fund’s potential to add value, net of fees, over and above a specified and understandable reference point. 

Recommended funds are worthy of advisers’ attention because, as well as having clearly articulated positive attributes and utility features, they have capacity to grow their assets under management and also feature widely on fund platforms.”

The Adviser Centre is a practical information source.  We recommend a carefully selected, relatively focused range of funds that we believe are of high quality and offer value for money.  Recommended funds must be easily accessible to advisers and well-supported by asset managers. Thus, in our opinion, Recommended funds are ideal candidates for use in an adviser’s on-going business.     

Established

“Established funds are actively-managed funds that we have assessed quantitatively and qualitatively and satisfy our thresholds with regard to quality and value for money.  Quality is defined as our assessment of a fund manager’s abilities, experience and resources in the context of a fund’s objectives.  Value for money is defined as our assessment of the fund’s potential to add value, net of fees, over and above a specified and understandable reference point. 

Established funds have positive attributes and utility features that can be clearly articulated but they are at or near to full capacity in terms of their assets under management. Asset managers may have ceased active marketing and/or the funds may be soft or hard-closed.  We feature Established funds in order to assist advisers who may be required to assess and monitor such funds for their existing businesses.”    

A consequence of popularity is that some of the most highly-regarded and well-established funds can grow to large sizes.  This is challenging for the fund managers concerned, who wish to protect the interests of their existing investors.  The desire to continue to deliver risk and performance outcomes that match their investors’ expectations is an important component of their duty of care.

Large funds require particularly careful management in respect of individual security and overall market liquidity.  (We note that ‘large’ needs to be taken in the context of the asset class in question.)  In many cases, an investment approach needs to be modified to some degree in response to the growth of the fund size, particularly where less liquid investments have historically been used.  Stock capitalisation, position sizing and concentration are all issues that require close attention in respect of larger funds. 

The Established category acknowledges this reality and features those funds that are near or at their full capacity, but continue to demonstrate identifiable merits according to our criteria.

Positive Watch

“Positive Watch funds are actively-managed funds that we have assessed quantitatively and qualitatively and that we believe have the potential to be Recommended funds in the future.  Positive Watch funds have identifiable merits but there are clear reasons why they are not yet Recommended.

Positive Watch funds may feature in this list for a variety of reasons.  They may be run by talented younger managers, or they may be run by a manager who has moved to a different firm and/or is running a different type of mandate.  Positive Watch funds may also be product innovations or funds undergoing change.”

We are passionate about research and about identifying talented managers and the exciting products of the future.  The Positive Watch list is the forum through which we publish our developing views on a fund. On our Positive Watch fund factsheets, we articulate why we are positive about a fund and explain why we are still watching it.  We hope and expect the majority of Positive Watch funds to move to Recommended over time, assuming our expectations are met.  

 

Key Considerations

Our assessments are built around the critical elements of:

  • Quality – assessing a fund manager’s abilities, experience and resources in the context of a fund’s objectives.
  • Utility – assessing a fund’s risk and return characteristics and formulating our expectations for its behaviour in different market conditions.
  • Value for money – questioning whether a fund has the potential to add value, net of fees, over and above a specified and understandable reference point.  This value-add may be expressed simply in terms of its performance outcome compared to a relevant passively-managed vehicle; alternatively, the value-add may be determined by attractive risk-adjusted returns or a lower volatility outcome; it may also be a manager’s ability to run a mix of assets successfully or to provide access to a specialist investment opportunity.  Therefore a fund’s “value for money” is not only about its costs, but also about the kind of outcome it offers to investors.

 

Bulletins

All changes to the Recommended, Established and Positive Watch lists are communicated by means of a bulletin.  Bulletins are written when funds move from one list to another and when funds are completely removed from a list.  Bulletins detail the reasons why the actions have been taken. 

All our bulletins can be found in the “Bulletin” section of The Adviser Centre and are also tagged to the relevant funds and can be seen in the “Related Content” area for specific funds. 

People & Process