The five sectors are to enable investors to compare ranks of funds with risk-targeted and multi-asset funds.
The universe will be divided into five risk bands, with 100 being the level of the FTSE 100 index and zero equating to cash. While a fund’s position within a band is not static, it must deviate from the set parameters for more than 16 weeks before being reassigned.
The sectors will be available to FE Analytics users from today and are as follows:
UK RMA [Risk-targeted Multi Asset] Risk Band 1 (FE risk <30)
UK RMA Risk Band 2 (FE risk 30-50)
UK RMA Risk Band 3 (FE risk 50-70)
UK RMA Risk Band 4 (FE risk 70-85)
UK RMA Risk Band 5 (FE risk 85+)
FE has identified 230 funds which meet the criteria for the sectors.
“Until now, advisers considering risk-targeted funds have had little objective support when making like-for-like comparisons,” managing director Michael Holland said.
Managing director of Square Mile Investment Research Richard Romer-Lee commented: “The implementation of RDR has led to a growth in the number of advisers seeking to outsource investment decisions. This new universe from FE will better equip advisers to demonstrate best practice by providing a mechanism for like-for-like comparisons of risk as well as performance.”
