The FINANCIAL — Fitch Ratings today unveils a new system of qualitative fund ratings, adding to offerings from existing providers such as Morningstar and Standard & Poor’s.
The rating agency’s classifications measure the worth of funds’ investment methods as well as their internal controls, operational platforms, drivers of risk-adjusted performance, staffing levels, governance and historical performance.
Funds will be ranked on a six-tier scale, with “excellent” being the best mark and “inadequate” the worst. Ratings wiill be paid for by the funds being rated, and will only be assigned after on-site interviews.
“What makes the system unique is it’s more forward-looking than some of the more traditional quantitative rating products which rely on historical risks and returns,” said Roger Merritt, global head of Fitch’s fund and asset management ratings group. “Qualitative analysis is the core of this product. We’ll look at investment processes and drivers of performance.”
Grading Ucits funds will take priority due to a surge in demand from managers who would like to see European cross-border funds draw greater scrutiny.
“There are over 35,000 funds available to investors in Europe alone and Ucits developments will amplify cross-border distribution,” said Aymeric Poizot, Fitch’s head of fund and asset management ratings for Europe, the Middle East and Asia-Pacific.
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