AV Analysis aims low-cost research and analysis at the intermediary market
A funds research ratings service, run by intermediary group AV Analysis, has been launched in direct competition to Standard & Poor's.
Fund Intelligence, which will be marketed to intermediaries by the Tunbridge Wells-based group, scores onshore unit trusts and Oeic funds, according to risk, charges and what it calls potential.
The service has been developed from the group's existing in-house research, and is designed to help advisers who do not have extensive research facilities by providing a simple and succinct tool on which recommendations to clients can be based, according to Karen Vidler, director at AV Analysis.
Vidler said the tool, which can be delivered in electronic and paper format, scores funds in three areas after a qualitative screen has narrowed the onshore universe down from more than 2,400 funds to about 700.
The screen omits any fund that has been in the bottom quartile for the past 12 months, creating a manageable selection of funds consistently maintaining a place in the upper levels of performance. Further screens reduce that to about 200. After that each fund is investigated and given an 'R' score, a score between one and 10 assessing volatility and risk. This score, which is derived through a fixed quantitative and qualitative process, is designed to be both forward and backward looking. It takes into account factors such as historic volatility, volatility in the sector, the mandate of the fund, risk management disciplines and investment style to derive an indication of possible future volatility.
Next is the 'P' ('potential') score and is designed to be as forward looking as possible. In calculating the 'P' score, AV Analysis begins by assessing the track record of the management team as opposed to the fund's track record. It also takes into account the management group's financial strength and willingness to adequately replace managers who leave. Size is also a factor, as in some areas, such as in smaller companies, a large fund size can become a negative factor.
The 'C' score differs from the other two in that it calculates three years of total charges net commission, rather than giving a number of between one and 10.
Fund Intelligence is not based around the Autif sectors but the aims of intermediaries and their clients. Funds are categorised into high income, income and growth and growth.
Each fund is accompanied by a brief description. An example is: 'Aberdeen Emerging Markets: An established and internationally-based team operating from London, Singapore and the US, manages this fund on a long-term basis through a diversified portfolio. Ultimately managed on a team basis, this fund will also invest in firms listed on established stock markets active in emerging markets. While benefiting from continued new investment, this fund is comparatively very small in size.'
Even though the services currently only cover onshore unit trusts and Oeics, AV Analysis intends to extend that to investment trusts and FSA-recognised offshore funds. The electronic version is only available on CD, but by the end of the year, AV Analysis aims to deliver the services via its website, www.fundintelligence.co.uk. The cost of the product is £100 per month for intermediaries with one to five advisers, £200 for firms with five to nine advisers, and £300 for those with 10 to 26 advisers. Charges for larger firms are set by negotiation.
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