Martyn Ingram of The Investors Partnership explains how the winners of the 2006 RealAdviser Multi-Manager Awards were chosen
The methodology that underpins this year's RealAdviser Multi-Manager Awards is the same as that set in 2003, when the UK's first comprehensive multi-manager awards for the retail fund of funds sector was presented in RealAdviser's forerunner, Multi-Manager magazine.
The overall aim is to reward consistency of performance, using data from Lipper and other relevant sources. Both Paul Talbot and I have been members of the judging panel since the start and, for the last two years, the Multi-Manager Awards have been run by RealAdviser. Paul and I, along with Julian Marr, editorial director of RealAdviser, made up this year's judging panel.
My role within the Multi-Manager Awards process is centred on identifying all the funds that qualify for shortlisting. The analysis process screens for UK-domiciled fund of funds that have a minimum track record of one year. The full Lipper database - not just a multi-manager universe - is used to identify these funds, and the information gathered is then used to create multi-manager peer groups that also take account of each fund's investment objective and investment policy.
Composite indices and single indices are then used to measure fund performance. Where appropriate, peer group sectors that are explicitly used by the fund managers are also used to measure fund performance.
This basic analysis is then cross-referenced with data records from the previous year's awards and any significant changes that could influence a fund's qualification for shortlisting are noted. The judging panel then uses its pre-agreed strict criteria to identify which multi-manager funds pass this first screen and therefore qualify for provisional shortlisting. Reserves are then added to the list in order to avoid problems in the event of any of the shortlisted funds being disqualified during the remainder of the analysis process.
The analysis then includes a background check on the shortlisted funds. The final analysis incorporates data analysis from 2003 and 2004, when work for the first and second Multi-Manager Awards was undertaken. Once this is complete, the research undertaken by the judging panel is gathered and used to identify the final shortlists, from which the 2006 award winners were selected on the basis of overall merit.
The RealAdviser Multi-Manager Award winners and categories can be found outlined in the preceding pages and the main criteria that led to their selection are:
lUsing statistics provided by Lipper, the winning funds have performed well relative to their benchmarks and the relevant RealAdviser Multi-Manager peer group over each of the last three discrete years, to 30 June 2006.
lThe winning funds are at least £20m in size as at 30 June 2006 (or £10m in size for the judging of the Specialist category).
lThe categories of fund of funds include unconstrained and fettered fund of funds. For fettered fund of funds there is a requirement that the manager has access to a broad range of underlying funds.
lAll the shortlisted funds meet the fund of fund criteria, both at the start and end of the investment period.
In addition, the judging panel takes account of changes of individual manager and/or changes to investment mandates during the three-year period. Account is also taken of benchmark changes and peer group changes during the period.
As in previous years, the judging panel has given awards to the winning funds and not to the individual managers. Consequently, experienced managers who take on funds with a track record of less than three years cannot win the individual multi-manager fund awards.
That said, the judging panel is, of course, aware of the performance achievements of the individual managers, and the results achieved by the managers are taken into account when assessing the peer group performance results of individual funds, especially over the last two discrete years.
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