Future performance rating made easy

Future performance rating made easy

We have created a simple and consistent method to rate funds taking into account the three most important factors that will have a bearing on the future performance of the fund being rated:

  1. People - here the raters express their view on the capabilities and motivation of the Fund Manager and their team. Another factor that can be expressed here is the quality of the management company as a whole in terms of values, financial strength, risk controls, service etc.

  2. Portfolio - here the raters rate the fund in terms of its ability to deliver returns in different market circumstances. Different types of data can be used, such as, sector exposure, information ration, investment strategy, maximum draw down, up and down capture, active share of the fund, use of derivatives, exposure limits etc.

  3. Price - last but not least, the rater is asked to rate the fund in terms of its cost relative to alternative investment vehicles that invest in the same asset class.

The four P's of marketing

Each P get a rating between 5 and 1 stars.

The rater can set the relative weight they give to each of the above P's.

The calculated weighted average of the 3 P's is ultimately the rating the Advisor gives the fund.

For example, assuming the Advisor expects the fund to massively beat its benchmark then he should rank the 3 parameters close to 5 stars so that his overall ranking of the fund will be 5 stars.