Lonsec's new approach to rating index funds
Ratings house Lonsec has changed its research process for index funds and will now use separate criteria to rate index managed funds and exchange-traded funds.
According to Lonsec research manager Michael Elsworth, index funds now have a critical mass in most asset classes and the process used to rate such investment vehicles needs to be different to the criteria used to assess actively managed funds.
Consistent with their research approach taken across all asset classes, Elsworth said there will continue to be a split of 80 per cent qualitative and 20 per cent quantitative in considering index funds.
He said the rating scale for actively managed funds (highly recommended, investment grade and so on) will also be adopted for the new process.
He added that the word 'index' will appear in superscript next to the name of the rated fund in order to alert financial advisers to the fact a different criteria has been applied to the rating.
"Once an index has passed Lonsec's initial research screens, funds will be assessed by conducting a peer relative assessment of people and resources, investment process, liquidity and performance," Elsworth said.
Recommended for you
A decade after being permanently banned from financial services, a former financial adviser will finally face court in WA following a failed bid to avoid extradition.
Adviser numbers have experienced their largest weekly loss year-to-date this week, doubling that of the previous week.
The number of advisers currently using or planning to use artificial intelligence in their practices has risen substantially to almost three-quarters of firms, according to Adviser Ratings.
Morningstar believes there is still further to run with the potential takeover of Insignia Financial even with original bidder Bain Capital walking away.
