Investment Selection
The quality of fund management will have significant influence upon likely future returns. We filter the entire listing of UK retail investment funds by preferring funds that are rated AA by OBSR and Morningstar S&P, the respected fund rating agencies. We may accept an A rated fund to provide a required market exposure.
OBSR Fund Management Ratings
The OBSR fund ratings are determined following in depth qualitative and quantitative analysis with the emphasis upon strength of investment process, continuity of personnel, investment style, past
performance and risk adjusted returns.
AAA Rating
This is the highest award. It is given to funds which demonstrate very powerful investment processes and disciplines and is an indication of ‘exceptional’.
AA Rating
Using the same methodology this is an indication of ‘very good’.
A Rating
Again using the same methodology this is an indication of ‘good’.
Source: OBSR website.
Morningstar Fund Management Ratings
The Morningstar Fund Management Ratings are based on the evaluation of historical performance, volatility and portfolio construction as well as management, corporate status and investment process, the factors that contribute to long term performance. Only the top 20% of funds in each asset class pass the initial Morningstar performance screening.
AAA Rating
The fund demonstrates the ‘highest standards’of quality in its sector based upon its investment process and management’s consistency of performance as compared to funds with similar objectives.
AA Rating
The fund demonstrates ‘very high standards’ of quality in its sector.
A Rating
The fund demonstrates ‘high standards’ of quality in its sector.
Source: Morningstar website, Money Management.
Investment Performance
Consistent performance figures do not lie and that quality fund management will express itself in above average and top quartile returns. We therefore point score quartile performance over 3 months, 1 year, 2 years and 3 years, with a weighing to recent performance. We also point score 5 year and 10 year actual average growth rates to reward long term consistent performance.
Quartile rankings are based on discrete performance over the specified measured period to month of publication on a sell to sell income reinvested basis. Fund yields are based upon the gross dividend prediction of the fund manager.
Morningstar Fund Performance
The Morningstar Star Rating is calculated using a funds monthly performance relative to its sector average for the past 36 months. The average and volatility of the 36 numbers is used to calculate a funds star rating.
5 ***** - Funds in the top 10% of the sector
4 **** - Funds between 10 - 32.5% of the sector
3 *** - Funds between 32.5 - 67.5% of the sector
2 ** - Funds between 67.5 - 90% of the sector
1 * - Funds in the bottom 10% of the sector.
Source: Morningstar website.
Fund Selection
The combined points score from several past quartile performance, actual average growth rates, current yield and fund management confidence factors from leading fund rating agencies will provide
us with an overall merit rating. Each fund which passes through our initial screening process will receive a point score on our “Purchase List”. The highest scoring funds are then usually but not exclusively selected into our portfolios.
Risk rated returns
All selected investment funds and investment portfolios are given a risk rating from 1 to 8 in order to match fund selection to attitude to risk and reward.
The value of capital and income arising from an investment is not guaranteed. Stock and unit prices may go up as well as down and an investor may not get back the amount originally invested.
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