S&P Capital IQ unveils new grading system for passive strategies
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Passive funds will be treated as a separate asset class under a new grading system introduced by S&P Capital IQ Fund Research.
Passive exchange-traded funds (ETFs) and index tracker funds will be assigned a platinum, gold or silver rating under the new methodology while actively-managed ETFs will remain subject to the previous system.
Kate Hollis, Director, Fund Research, S&P Capital IQ: “We are seeing a massive upsurge of interest in passive funds. Low cost beta propositions, with low or no management fees are becoming a reality.
“In the run-up to UK retail distribution review (RDR), established players and new providers alike have introduced plain vanilla low-cost tracker funds reinforcing extreme competitive pressures.
She adds: “We believe the best way to determine which passive funds can achieve a grading - that is to say, which funds have achieved their objectives in the past and are likely to achieve them in future - is by combining the quantifiable, such as the costs and historic track record, with the qualitative or the way in which performance has been achieved and the people and processes involved.”
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