A complete income fund universe and 360° analysis determine Income fund Diamond Ratings from Defaqto
24 May 2017
Financial information business Defaqto has launched Income Diamond Ratings to help advisers identify where income funds sit in the market.
Defaqto identified a need for comprehensive and whole of market research into income funds incorporating both an assessment of performance and other key income-related attributes.
The unique ratings have been designed to give advisers a solid framework around which they can both position and recommend income funds.
The analysis included rating all income funds that promote themselves as ‘income’ and not just those that sit within the Investment Association (IA) income sectors but also those that have moved to ‘unclassified’ and other sectors.
The panoramic analysis by Defaqto also rated historic performance using risk adjusted total return, delivered income yield and income volatility. It also considered forward looking indicators of OCF, fund size and manager tenure when determining the rating.
Of the 10,000 plus funds or fund families that Defaqto analyse, income funds comprise almost 600 funds. They are split into 176 equity, 285 fixed income and 136 multi-asset funds respectively. The number of income funds analysed is continuing to grow as more income funds are coming on stream.
With our whole of market coverage, we have rated funds ranging from only £116,215 funds under management (FUM) to the largest of £15.1bn FUM.
Each income 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 investment planning software solution for advisers, Engage.
Engage allows advisers to profile their clients, undertake research and create recommendation reports. 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 investment 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.
Jason Baran, Insight Analyst for Investments at Defaqto comments:
“Our Diamond Ratings provide a unique approach to the fund universe, assessing a wide range of features. Our Income Diamond Ratings have been derived as a result of a 360° view that combines the factors that are most important to clients investing for income, historical information about the income funds and forward looking analysis as well as only focussing on all funds that market themselves as ‘income’, and not just those in the Investment Association income sector.
“Our Diamond Ratings for Income help advisers with their investment planning and provide them and their clients with comfort post-recommendation.
“Importantly, our Ratings are completely unbiased and we rate the individual propositions, not the provider or fund house.
“Our Engage software helps advisers manage their investment 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 compliant advice. “
