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Selecting the Wealth Shortlist

Our analysts spend thousands of hours crunching the numbers and meeting fund managers. Their analysis helps narrow the field so investors can choose from the funds we believe have greatest long-term performance potential.

The Wealth Shortlist isn’t a one-off process. The Research team constantly monitor the list. We add and remove funds using a strict selection process.

A change to the list isn’t a recommendation to buy or sell. You’ll need to consider your own goals, attitude to risk and wider portfolio before making any investment decision. Funds can fall as well as rise in value and you could get back less than you invest


1

Screening the investment universe

Before we dive into our analysis, we make sure the funds we’re looking at meet a few important criteria. For example, we make sure the funds are available to all retail investors, and they can be held in ISAs and SIPPs.


2

Quantitative and qualitative analysis

Each analyst in the Research team specialises in specific IA fund sectors. The analysts’ objective is to monitor funds in their sectors and identify the ones with the greatest performance potential to outperform their benchmark and peers.

They analyse funds using both data (quantitative analysis) and by speaking to fund managers (qualitative analysis).

Quantitative analysis

Quantitative analysis includes looking at:

  • The liquidity of a fund, its size, and underlying holdings
  • Manager or team’s investing track record
    • Has the manager outperformed a fair benchmark over their career?
    • How have they’ve achieved any outperformance – is it stock picking skill or asset allocation?
    • Performance through market cycles – has the fund performed how we would expect it to given the manager’s philosophy, style and process?

Qualitative analysis

Qualitative analysis includes economic research, factoring in industry expertise and regularly speaking to fund managers, as well as looking at:

The manager

  • Does the fund manager have other roles or responsibilities? Do they spend enough time on fund management?
  • How good is the team surrounding the fund manager?

Culture

  • Is the fund manager incentivised in a way that aligns their interests with their investors?
  • What do we think about the fund’s parent company?
  • Does the manager consider Environmental, Social and Governance (ESG) factors?

Process

  • Does the manager have a clear investment philosophy and process?
  • Is the fund manager consistently following their investment philosophy and process?
  • How does the fund manager construct their portfolio?
  • What does our analysis say about the fund’s size and liquidity?


3

Proposal and voting

Anyone in the Research team can suggest ideas for initial analysis. But analysts can only propose adding funds to the Wealth Shortlist from the IA sectors they’re responsible for.

A member of the Senior Research team must second any proposed addition of a fund to the Wealth Shortlist. We also include a 'devil’s advocate' in team debate.

Votes to add new funds to the Wealth Shortlist are submitted individually. The votes and reasoning are all recorded.


4

Adding funds to the Wealth Shortlist

A fund is only added to the Wealth Shortlist if it achieves at least a two-vote majority.

We’ll tell everyone who’s signed up to our research updates, as well as holders of the fund, when we make an addition to the Wealth Shortlist.

Sign up to our fund research updates


5

Ongoing review

The Wealth Shortlist is under constant review. We monitor funds on the Wealth Shortlist within their IA sector.

Members of the Research team must also monitor their sectors to identify other funds that might meet the criteria for inclusion on the list.

The Senior Research Team meet every month to review funds on the Wealth Shortlist against factors designed to highlight potential risk to clients, including performance, liquidity and fund flows. If these risks become a cause for concern and flag negatively against these factors, we’ll email holders of the fund even if our conviction remains.


6

Removing funds from the Wealth Shortlist

Proposals for removal can be made by the analyst who covers the sector, or a member of the Senior Research team. Challenge to fund selections can come from anyone in the Research team. Removals only require a majority vote of one.

We might also remove funds which we continue to have conviction in, but for various reasons we no longer consider it sensible to put more money into.

We‘ll always explain our reasons for removing a fund from the list and update all holders.