Dynamic Planner launches 'industry first' fund comparison tool
Advisers can now compare a fund's performance based on its level of risk through Dynamic Planner's new benchmarking feature, which it said would "transform" the way investors can track fund performance.
In what Dynanic Planner also called "an industry first", the investment planning system provider teamed up with ratings group MCSI to make its multi-asset indexes available to advisers.
The new feature makes it possible to compare the performance of a fund based on the assets within it as opposed to comparing between different asset classes. The previous lack of such a tool has made it difficult for advisers to compare funds with similar risk classes.
Dynamic Planner chief executive Ben Goss said the benchmark would help advisers explain correlations between levels of risk and returns, which would be particularly useful given increasing regulations around risk.
"The Financial Conduct Authority (FCA)… has brought to the fore the importance of demonstrating returns for the risk taken by the investor. Until now, there has not been a credible way in which to show this," he said.
"We have worked with MCSI to fill this void and deliver this suite of independent risk-targeted benchmarks to UK advice firms and investors."
The tool launch follows the release of FCA rules in February requiring fund managers to explain why or how their funds use particular benchmarks or how investors should assess the performance of a fund.
Dynamic Planner Module has been running for a decade and consists of 10 indexes based on weightings provided by Dynamic Planner, based on different levels of risk. The indexes within Dynamic Planner's module will track the performances of its risk model back to September 2005. Advisers and investors can now access historical data around these indexes to compare fund performance.
Goss added: "The Dynamic Planner Indexes will quite literally transform the way in which advisers and investors are able to review and track the performance of funds against a given risk profile. Currently fund managers can choose and select their own benchmark from thousands of options."
The problem with this current approach, Goss said, was it made it near impossible for funds to be compared on a like for like basis.
MSCI Europe, Middle East and Africa head of wealth, index products Steven Kowal said there was a "long-standing demand" in the marketplace for risk targeted multi-asset class indexes that could serve as benchmarks for investors.
"Sector and other peer-group averages can provide general guidance but can be too broad and not replicable. MSCI's collaboration with Dynamic Planner…aims to fill this void by offering these independent, daily indexes," he said.
More on Investment
Industry Voice: The moral philosopher's curse
Marte Borhaug explores the ethical dilemmas and unintended consequences that can result from trying to do the right thing.
