Defaqto introduces new fund ratings service

Defaqto has launched a new ratings scale to help advisers identify where managed funds sit in the market.

Defaqto introduces new fund ratings service


Diamond Ratings will use both qualitative and quantitative approaches to examine funds across the market, with fund performance and competitiveness in areas such as cost, scale, access and manager longevity all being taken into account.

Each considered element will be rated on a scale of one to five using a method called Data Numerical Analysis (DNA), with five being the highest. The fund’s DNA scores will then be combined to give it an overall figure, which will be used to rank the funds.

Funds that will be included in the ratings include multi-manager and directly invested funds in four IMA Mixed Investment and IMA Flexible Investment sectors.

The independent financial research company said that the launch comes as increased numbers of advisers are looking to outsource some or all of their investment decisions.

David Cartwright, head of insight at Defaqto, said: “In an increasingly complex area, outsourcing can take several different guises including discretionary fund management. The other main form of outsourcing investments is through managed funds, either directly invested or multi-manager.

“Our research indicates that managed funds have evolved into two distinct groups: return focused and risk targeted. However, many advisers have continually fed back to us that it has been a real challenge to make fair and relevant comparisons in this market. We have therefore introduced our Diamond Ratings as a mechanism for independently assessing managed funds, to help advisers see where they sit in the market and to compare funds on a clear and consistent basis.”


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