People & Process

Our Research Process


The primary aim of our fund research process is to identify fund managers who have a discernible and valuable competitive edge.

By assessing a fund manager’s approach and style, we generate an understanding of a fund’s characteristics. This gives us insights into its likely behaviour in different market conditions and enables us to anticipate its risk and performance profile.  This analysis enables us to determine how funds can be used and how they can be blended with others to achieve particular objectives.    

In conducting our research, we employ quantitative and qualitative techniques.  We have been using this blended method for many years and, when combined with an understanding of prevailing market behaviours, it is a powerful approach to fund analysis.   ‚Äč

Fund Universe

We consider the whole of the actively managed funds market (available for sale in the UK) without prejudice.  For practical reasons, the following basic thresholds must be met in order for our research to proceed:

  • Funds should feature on a range of fund platforms.
  • Funds should have a clean share class.
  • The asset manager should be willing to support and grow its adviser client base.
  • A ‘Recommended’ fund should be at least £20 million in size, or be part of a larger book of assets dedicated to the strategy, and its assets should be growing rather than diminishing. A ‘Positive Watch’ fund can be smaller in size, with the potential to grow.

Screening and Idea Generation

We use various methods to screen the available universe and to source new ideas.

  • Our experience and industry connections: we are extremely well-connected by dint of the years that we have been involved in the industry and this provides an invaluable foundation to our research.  For new ideas that have the potential to feature on our ‘Positive Watch’ list, we actively seek the opinions of our contacts at the asset management houses, both from the fund management and the sales sides of the businesses.  Over the years, our clients have also been a source of new ideas and we ensure that we understand why certain funds are capturing advisers’ attentions.
  • Regular screening: we run quantitative screens for every sector in order to monitor our existing recommendations and to highlight funds that appear to be delivering interesting results.  The screens show performance as well as a range of risk characteristics to enable us to build up a detailed quantitative picture of different funds and how they fare in different circumstances. 

Fund Research - Qualitative Analysis

Our approach emphasises the qualitative analysis of fund manager styles, investment decisions, subsequent performance and the added value over a relevant passive alternative (where applicable).

  • Information gathering: we collect information on all the funds that we cover.  From the asset manager, we request a fund’s standard ‘Request for Proposal’ document, presentations and other marketing material and historical performance attribution.  We have access to a variety of third party information sources and we also have a close working relationship with FundsLibrary. 
  • Fund manager meetings: interviews are a crucial part of our investment process.   There is a significant human element in fund management and we believe it is only through an understanding of a manager’s decision-making process and behavioural biases over time that we can fully anticipate the likely outcome from a fund.  We have excellent access to fund managers and most of our meetings are conducted on a face-to-face basis, or by videoconference/teleconference where the manager is based overseas.  The meetings are typically attended by at least two members of the team.  Notes are written up after every meeting, which incorporate our concluding thoughts and opinions. A manager’s investment philosophy lies at the heart of every fund and our assessment of new funds begins here, with an in-depth discussion about how a manager believes he or she adds value.  The process employed, the team and resources, the firm’s culture and structure, the portfolio construction framework and risk controls must all be appropriate and sufficient for the objectives of the fund.  Our interviews explore all of these factors. We have a formal timetable of meetings with the managers of all the funds featured within The Adviser Centre, meeting with them every six months.  Ad hoc meetings are arranged as deemed necessary.  ‘Positive Watch’ funds and those under consideration are typically reviewed more intensively as our views on these funds develop.

Fund Research - Quantitative Analysis

Quantitative analysis is a very important input to our fund research process and it imbues all stages of our analysis.  It helps us both to frame and to monitor our expectations of a fund’s performance profile by objectively highlighting fund managers’ potential style biases.  In particular, it is a crucial step in confirming or questioning our expectations of a fund manager’s style and the factors affecting a fund’s performance.

We use a variety of data sources to analyse risk and return statistics, with Morningstar Direct being our primary tool.  We are particularly interested in understanding consistency in a fund’s outcome, taking into account its style and approach.  We review a wide range of measures in assessing risk-adjusted performance and we look carefully at discrete periods of time to analyse a fund’s behaviour in different market conditions.  

Internal Formal Meetings and Monitoring

As a team, we work very closely together and hence, discussions take place informally day-by-day.

We conduct a formal monthly meeting, The Adviser Centre Review Meeting, to review all the funds currently featured within the service and to consider potential additions.  All decisions to introduce funds to, or remove funds from, The Adviser Centre must be agreed by the entire team.

We generate weekly quantitative packs to provide an analysis of short-term fund performances, which helps us to identify any unusual movements by individual funds, but this is always taken in the context of market direction and behaviour.

Market Understanding

We believe that a robust framework of market understanding is crucial for undertaking effective fund research.  We receive a wide range of third party research from strategists and brokers, which assist in our understanding of market and macro-economic dynamics and issues.

Combining these inputs with the knowledge that we gather from our fund research and interviews is very powerful and means that we are well-placed to form fair and well-informed judgements on funds.

Changes of Opinion and Bulletins

The team works closely together and changes to our views are discussed informally throughout the working week.  Our views are discussed formally at The Adviser Centre Monthly Review Meeting.  Should any action be required in terms of a fund being added to, or removed from, The Adviser Centre, or if a fund is potentially migrating between the Recommended, Established or Positive Watch lists, this is agreed between the team members and a bulletin is posted onto the website after the meeting.

Should any event occur that necessitates an immediate change of view, such as a fund manager departure, this is agreed between at least two team members and a bulletin is posted onto The Adviser Centre as soon as practicable.

People & Process