Single Asset Diamond Ratings from Defaqto
27 July 2017
Financial information business Defaqto has launched Single Asset Diamond Ratings to help advisers identify where these funds sit in the market.
Defaqto identified a need for comprehensive and whole of market research into single asset funds incorporating both an assessment of risk adjusted performance and other key attributes, in particular ongoing charges.
These unique ratings have been designed to give advisers a solid framework around which they can both position and recommend single asset funds to clients investing for return.
The extensive analysis includes rating historic performance using risk adjusted total return, both total risk (Sharpe ratio) and downside-only risk (Calmar ratio). Forward looking indicators of OCF, fund size and manager tenure are also considered.
Of the 10,000 plus funds or fund families that Defaqto analyse, more than 1,500 are single asset funds. They comprise of: 386 UK equities funds, 337 Global equities funds, 315 Emerging Market equities funds, 234 North American equities funds, 168 Europe ex-UK equities funds and 94 Japanese equities funds.
Multi-asset funds have been well established in Defaqto’s Diamond Ratings since the beginning, so to introduce single asset ratings is a natural progression and over time more asset classes will be added including fixed income funds.
Each fund is rated on a scale of 1 to 5, which is the Diamond Rating. For funds and fund families a Diamond Rating marks the performance and comprehensiveness of the fund in key areas such as cost, scale, accessibility and manager longevity. Once the adviser has identified the most suitable product, Defaqto Ratings gives them and their clients’ assurance of the quality of the proposition they have selected.
The ratings are available to view and use within our research software solution for advisers, Engage.
Engage is an investment planning tool that has over 17,000 funds and a vast amount of data available for use during the research process. It covers fund performance, risk adjusted return ratios and costs which advisers can use to filter, sort, rank and analyse the options to make the most suitable recommendations for their client. It has a variety of workflows to service a range of clients, whether they be looking to grow their wealth, consolidate assets or withdraw an income.
Engage helps advisers manage their financial planning process all in one place, allowing advisers to efficiently meet their differing clients’ needs and their firm’s preferred financial planning process as well as providing all the necessary documentation to ensure that they are delivering suitable, compliant advice.
Patrick Norwood, Insight Analyst for Funds at Defaqto comments:
“Although many advisers have outsourced the asset allocation and individual fund selection decision through the use of multi-asset funds, Defaqto recognises that there are still others who prefer to build their own portfolios for clients using single-asset funds.
“We already provide single-asset Diamond Ratings for passive funds, both traditional and ETF, across the main asset classes so it was only natural that we would seek to extend this to active funds, thereby increasing significantly the areas covered by Defaqto’s fund ratings.”
“Our Diamond Ratings help financial advisers get an at-a-glance overview of the market and provide them with an unbiased assessment of the funds available to them. Also they are whole of market, independent and the individual proposition is rated, not the provider or fund house.”
