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S&P upgrades mutual fund research product

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Standard & Poor’s Equity Research Services has made an upgrade to its open-end mutual fund research product for financial advisers and their clients.

Standard & Poor’s Equity Research Services has made an upgrade to its open-end mutual fund research product for financial advisers and their clients.

The research is available through S&P’s MarketScope Advisor platform, a source for multi-asset class research, rankings and allocation strategies.

The new S&P mutual fund product incorporates bottom-up research about a fund’s underlying holdings as well as performance, risk, and cost analysis to rank more than 20,000 mutual funds on a scale of one (lowest) to five (highest). 

The methodology goes beyond the fund industry’s traditional approach to rankings, which are based on a backward-looking assessment of risk-adjusted historical returns, and bring a broad range of proprietary tools into the analytical process including S&P Stars research, S&P Credit Ratings, S&P Fair Value and S&P Quality Ranks.

The result aims to give a more robust picture of a fund’s risk/reward characteristics at any given point in time. It also gives S&P the ability to immediately analyse and rank new funds, without the need for a minimum three-year performance history.

"The poor performance of many highly-rated funds during the recent market downturn highlights the limitations of backward-looking analysis and indicates to us that there is significant room for improvement in the way open-end mutual funds are analyzed and ranked," says Andrea Remyn, managing director, Standard & Poor’s Equity Research Services. "We believe our new methodology provides a more dynamic and functional view of the fund marketplace, giving advisors the tools they need to make an informed decision about how a fund fits with the investment objectives of their clients." 

S&P ranks mutual funds by decile within their S&P asset category and provides detailed peer comparisons throughout the fund reports. A fund’s ranking and pricing data are refreshed every week, reflecting its performance for the period as well as changes to S&P’s assessment of individual components as of the close of trading on the prior Friday.

All reports on equity, fixed income and blended mutual funds available through this new product will also include commentary from S&P on the fund’s ranking, performance, and holdings, enabling advisors to understand more about the fund investment approach.

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