Standard & Poor's has announced it will start rating new fund launches using qualitative criteria.
The move enables Standard & Poor's to provide detailed analyses on funds not covered by quantitative-based data firms which rely on ranking funds according to past performance.
Under UCITS III, fund promoters are extending their range of funds, and there are a rising number of 130/30* fund launches pending in the UK. Standard & Poor's believes its expanded offering will enable investors in heavily-marketed new funds to make more informed investment decisions, where competitor funds, which would normally serve as a benchmark, have not yet been clearly identified.
Extending Standard & Poor's fund ratings to new funds follows the success of a number of new funds that were analysed at the request of their managers.
Linda-Jane Coffin, head of Fund Ratings Criteria at Standard & Poor's Fund Services, says: "We found that many funds that had been rated at launch subsequently maintained an S&P rating as they built a track record. Some notable examples include Findlay Park American Smaller Companies and First State Asia Pacific Leaders fund, which proved their pedigree by continuing to perform strongly against their respective peer groups."
In order for new funds to be rated, the manager needs to demonstrate transferable skills against an appropriate benchmark as well as experience of comparable mandates.
Standard & Poor's Fund Services rates over 2,200 funds worldwide. These ratings are based on in-depth analysis of the stability of a fund’s parent group, the appropriateness of its investment policy, and the sustainability of its performance.
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