Defaqto is to mark down certain overly-large funds as part of its fund ratings criteria, over fears of a potential performance downturn resulting from excessive asset growth.
Fund concentration in the UK has significantly increased in recent years, with multi-asset absolute return giant Standard Life Investments' Global Absolute Return Strategies (GARS) sitting at £26bn and M&G's Optimal Income fund surpassing £15bn, for example. However, Defaqto has become concerned size may hinder a manager's ability to continue performing strongly in some cases, as a larger volume of assets can reduce their ability to move nimbly between trades. Frank Potaczek (pictured), senior vice president of funds at Defaqto, said: "Most people would disregard a fund if it was...
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