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THE GATEKEEPERS STUDY Unlocking the Secrets of Fund Research 2017

Delve into the world of fund research with insights on gatekeepers, fund managers, platform assets, selection criteria, and performance factors.

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THE GATEKEEPERS STUDY Unlocking the Secrets of Fund Research 2017

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  1. THE GATEKEEPERS STUDYUnlocking the Secrets of Fund Research 2017

  2. Gatekeeper /ˈɡeɪtkiːpə/ • an attendant employed to control who goes through a gate • A person or thing that controls access to something • An orange and brown European butterfly

  3. THE UK FUND INDUSTRY Assets • Q117: £997bn • 2010: £567bn • Q107: £444bn • 10-year growth: +125% Net sales • 2016: £20bn • Last five years: £62bn • Last 10 years: £146bn Source: Broadridge Financial Solutions

  4. GATEKEEPERS Fund managers (direct) Gatekeepers 50-70% Wholesalechannels Life & Pension COs Platforms60% IFAs~70-75% WMs~13% Life & Pens COs ~5% D2C p/forms >8% Banks etc<1% Primary channels <1% Investors Source: Fundscape

  5. THE SIZE OF THE PIE Platform AUA (Mar 2017): £520bn Gross platform sales in 2016: £94bn Net platform sales in 2016: £38bn Source: Fundscape

  6. THE SIZE OF THE FUTURE PIE £1.5trn Pessimistic CAGR to 2021: 18% Realistic CAGR: 22% Optimistic CAGR: 24% £1.2trn £894bn Source: Fundscape estimates

  7. ADVISER RISKS • Platform due diligence • Risk and return assessment • Whose asset allocation process? • Analysis and manager selection • Monitoring and reporting – benchmarking, charges, VFM

  8. ASSET ALLOCATIONRisk profile 5 OMW 5 DT 5 Cash 45% 0% Bonds 0% 35% Property 0% 7% UK equity 8% 26% Global equity 47% 32%

  9. HOW ACTIVE IS ACTIVE? Source: Morningstar, Cremers & Petajisto (2009), gbi2

  10. UK EQUITY ACTIVE Red band = FTSE All Share performance. Source FE, gbi2

  11. SELECTION CRITERIA • How to select if past performance is not a criterion? • Benchmarking • No more ‘suits you sir’ comparators • VFM‘Cost of management’ goes on researchers’ checklist • Unit price of active share benchmarks fund AMC • Qualitative assessment –selectivity process

  12. ADVISER RISK • Assessing suitability • Risk assessment and discussion • Design the portfolio to match • Asset allocation process • Manager selection • Monitoring and analysis • Reporting OUTSOURCING IS NOT EASY

  13. WHO ARE THEY? RATINGS AGENCIES D2C BUY-LISTS ADVISER BUY-LISTS DFMs

  14. METHODOLOGY • Assumptions • Total IA universe plus FCA-authorised funds • Two cohorts: listed and unlisted • Metrics • Alpha and beta v sector • Volatility • OCF • AUM, PTR, Fund life, manager tenure • Sales Performance Balance ratioTM

  15. UNIVERSE • Investment Association universe: 3,626 • FCA-authorised foreign funds: 5,189 • 1,161 listed funds from IA universe • 448 listed FCA-authorised funds • 198 fund groups • Listed cohort represents 18% of investable universe and 32% of IA universe

  16. COMMON DENOMINATORS ACROSS GATEKEEPERS • Positive alpha in the previous 3 years and current year • Track record of five years • Fund manager tenure of > 4 years • Assets >£200m • Asset growth evenly split between sales and performance (SPB ratio) = FUNDSCAPE FACTORS

  17. TOP FIVE GATEKEEPERSBY 10-YEAR RETURNS • ISA Ltd – Star Managers • Bestinvest Best of Breed • ISA Ltd – Growth Portfolio • Brooks Macdonald • Axa research fund range - Showcase

  18. MOST CONSISTENT PERFORMERS By returns over one, three, five and 10 years • ISA Ltd – Growth portfolio • Bestinvest - Best of Breed

  19. TOP FIVE GATKEEPERSBY FUNDSCAPE FACTORS • Fundscape Frontier Funds • Bestinvest – Best of Breed • Investment Adviser 100 Club • HL Wealth 150+ • AJ Bell Favourite funds

  20. TOP FUND GROUPS Q2 2015 Q1 2017 Funds # Apps • Schroders • Fidelity • Invesco • M&G • Jupiter • Henderson • Old Mutual • Col Threadneedle • BlackRock • Standard Life • Fidelity 68 243 • Schroders 61 233 • OM 69 220 • BlackRock 67 203 • Jupiter 34 186 • Invesco 42 178 • M&G 39 160 • Col Thread 45 153 • Henderson 41 148 • Artemis 21 129

  21. TOP FUNDS # PICKS Q1 2017 Q2 2015 • Stewart Asia Pac Leaders • BlackRock Gold & Gen • Artemis Income • AxaFram UK SelOpps • M&G Optimal Income • Newton Global Income • Jupiter European • IP Corporate Bond • OM UK Alpha • FS Global Listed Infras. • Stewart Asia Pac Leaders • Woodford Equity Income • Fundsmith Equity • Jupiter European • Schroder Tokyo • Liontrust Special Sits • Artemis Global Income • M&G Optimal Income • ThreadneedleUkEqInc • Artemis Income

  22. SELECTION FACTORS TO GET YOU NOTICED

  23. Five key conclusions • Blah blah CONCLUSIONS

  24. HOW WE CAN HELP FUND GROUPS • Provide an ongoing review of fund selectors in the market and how well they have performed • Outline the critical success factors for being selected in this challenging environment • Provide you with valuable competitor insight, allowing you to monitor your peers and benchmark your progress • Equip you with the necessary tools to help challenge fund selections and entrenched positions on lists

  25. INTERACTIVE DATA Search by fund group

  26. INTERACTIVE DATA Search by fund

  27. INTERACTIVE DATA Search by gatekeeper

  28. INTERACTIVE DATA Search by sector

  29. HOW WE CAN HELP • Gatekeepers Report plus full data set • £4000 • Quarterly analysis (annual data packages) • £2,000 • Bespoke analysis DISCOUNT CODE: SUMMER SPECIAL

  30. IN THE FUTURE • More gatekeepers • Feedback from fund groups • Feedback from intermediaries • Testing service

  31. THANK YOU

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