Making the Grade
Rowan’s Investment Grades for UK Funds
Introduction
This report is designed to help investors analyse the funds within the three UK equity unit trust/OEIC sectors:
- UK All Companies
- UK Equity
- UK Smaller Companies
Whereas the most commonly used approach to fund selection relies heavily on cumulative performance figures, this report analyses the funds (over three years) based on factors other than cumulative returns. This analysis results in each fund being given a grade (A-F) which reflects the ‘consistency and manner’ in which the fund has generated the three year returns.
Our premise is that:
Investors want funds with consistently good performance, with low volatility that increase in value as often as possible. Whilst this premise may seem simple it does, we believe, summarise the demands of most investors.
Naturally all investors seek a good return. The vital question is, clearly, “what constitutes ‘good’?” Rowan considers that good performance must be relative to the investment sector, in other words, having decided to make an investment, the investor wants the investment monies to be invested in the better performing funds within their chosen sector. Low volatility is sought as most people find significant fluctuations in value unsettling and make the timing of either a sale or purchase more difficult to judge. This of course has the effect of increasing the investment risk.
In addition Rowan believes that in periods of stockmarket rises, investors expect that their invested funds should increase also, therefore, the ability to participate in such increases as often as possible is understandably desirable.
This report is in portable document format (PDF). If you are unable to view the documents you will need to download the free Adobe Acrobat Reader.
