Fitch uses Lipper to help launch new Fund Quality Ratings

Fitch Ratings has launched Fund Quality Ratings, a new type of fund rating that brings together its own qualitative analysis with fund data from Thomson Reuters data company Lipper.

The new ratings provide access to both backward looking quantitative data and analysis, and forward looking assessments based on fund performance and risk attributes and consistency of longer-term returns relative to peer group or benchmarks.

The ratings focus on a number of key factors:

   – The fund manager’s investment strategy and practices

   – The main drivers of risk-adjusted performance results

   – The manager’s resource commitment, depth and quality of staffing, and technology infrastructure

   – The manager’s experience, financial resources and strategic commitment to the fund

   – benchmarking against longer-term, historical risk-adjusted performance for established funds, using Lipper and other data to analyse performance relative to peer groups

   – The strength of the operational platform, including custody, valuation, counterparties and governance

Roger Merritt, Managing Director and Global Head of Fitch’s Fund and Asset Management Ratings group said: “Globally, investors are looking for objective, forward-looking analysis of funds’ investment processes and performance drivers. Fund Quality Ratings meet this need by providing a level of transparency and institutional quality analysis that was previously difficult to access.”

Aymeric Poizot, head of Fund and Asset Management Ratings for Europe, Middle East and Asia-Pacific at Fitch, added: “There are over 35,000 funds available to investors in Europe alone and Ucits developments will amplify cross-border distribution. Investors need clear, insightful analysis and research to help them navigate this maze of investment offerings.”

Fund Quality Ratings are assigned on a six-tier scale.

Established funds are rated from ‘Excellent’ to ‘Inadequate,’ while funds without a three-year track record may be rated ‘Qualifying’ based solely on a Qualitative Assessment of the investment process and operational setup.

Funds rated ‘Excellent’ demonstrate the highest proficiency and strongest resource commitments in key areas of the investment process and have delivered high, consistent risk-adjusted returns relative to peers and/or benchmarks.

The ratings will be distributed globally and will be available on Thomson Reuters’ wealth platforms.

For further details on the fund attributes measured for the Fund Quality Ratings click here: [asset_library_tag 3428,Fund Quality Ratings Criteria]


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