• Research Approach & Methodology
• Philosophy
• Process
• Categorisation
• Quantitative Analysis
• Data Sources

Process

We devote the greater part of our efforts to qualitative analysis and base our judgements on face-to-face discussions with the senior business managers and other key personnel as well as the investment managers at fund management groups. We believe that, irrespective of what type of fund is being evaluated, it is important to understand fully the context within which an individual fund manager or team operates. We seek to satisfy ourselves that a given manager has a clearly-defined investment brief, a reference benchmark against which performance can be judged, the necessary technical and human resources to deliver consistently good results and a robust methodology including effective risk control procedures. Our qualitative analysis involves careful consideration of the following aspects of an investment management group:

• Ownership and stability: is the owner of the management group committed to the retail (i.e. unit trust and OEIC, life, pensions and or multi-manager) business? Is the investment team resourced properly and does it have the capability to deliver the investment objectives?
• Investment philosophy: what is the investment philosophy that lies behind each fund, how does the manager think he or she can add value and why?
• Investment process: what process does the group, team or manager employ to ensure that the philosophy is applied effectively and consistently?
• Personnel: does the group have sufficient resources to deliver the investment objectives? Does it have strength in depth or is it highly reliant on the special talents of a few individuals? We also consider whether the organisation promotes a star manager culture or uses a team approach.
• Research resources: to what extent are ideas generated within the group and what emphasis is placed on the use of external resources, for example brokers, economists, media services etc.?
• Risk controls: how does each organisation think about and define risk? Is there an effective method for monitoring risk and ensuring that managers adhere to the guidelines for portfolio mandates and to what degree is such scrutiny independent of the fund managers?

Our research team undertakes a rigorous and regular series of fund and company reviews, the vast majority of which are in the form of face-to-face meetings, to ensure that our understanding and opinion of funds remains current. As a minimum, we undertake quarterly reviews of our rated universe of unit trusts and OEICS, six-monthly reviews of multi-manager funds and annual reviews of life and pension funds. Additional meetings are held should circumstances dictate these to be necessary. We use these reviews to focus on establishing whether or not there have been any changes to the investment group, process or fund mandate and any bearing such changes may have on our opinion of a fund. We also concentrate on understanding the drivers of performance and determining whether or not these are consistent with the fund's objectives. Finally we discuss the manager's current strategy and how this is reflected in the fund. These reviews are then discussed at a series of monthly and quarterly internal meetings at which ratings are determined, reaffirmed or changed.

In order to achieve this, our analysts' responsibilities are divided by sectors in the mutual fund environment and by company in the multi-manager, life and pensions arenas. This enables them to have a depth of understanding in certain markets and asset classes whilst also having a breadth of knowledge across markets and asset classes. It is usual for two analysts to conduct each manager review meeting, to enable a thorough and balanced view to be formed and to ensure that these meetings are conducted efficiently.