Warning sounded on lack of quality in fund ratings

Biases found in best buy lists

Carmen Reichman
clock • 4 min read

Fund rating lists are biased and often do not base their ratings on the quality of the underlying funds, a report has warned.

Best buy lists and fund rating agencies, often used by advisers to select funds for their portfolios, may be misleading as they do not always choose the funds based on their quality and longevity of returns, the research found. This means some clients may be put in funds that are destined to perform well in the short-term but lack other fundamental strengths that would allow them to function well over longer periods. The report by research consultancy Fundscape and Graham Bentley's gbi2 found deviations in the ratings of some funds and their projected returns over a ten-year horizon -...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Investment

PA360: It is 'impossible' to pick out the best asset class every year

PA360: It is 'impossible' to pick out the best asset class every year

‘The outsourced route is one that a lot of advisers are now taking’

Hope Coumbe
clock 26 April 2024 • 2 min read
PA360: Framing of information to investors 'extremely pervasive'

PA360: Framing of information to investors 'extremely pervasive'

Consumer Duty states consumer biases must not be exploited

Jenna Brown
clock 25 April 2024 • 1 min read
Schroders chief executive Peter Harrison to retire in 2025

Schroders chief executive Peter Harrison to retire in 2025

Harrison began his career at Schroders as a graduate in 1988

Cristian Angeloni
clock 24 April 2024 • 2 min read