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FSA rejects Autif claims over past performance

The FSA has dismissed Autif&#39s latest research on past performance

data, claiming it brings nothing new to the debate.

In a letter to the trade body last week, FSA director of the risk

assessment division Dan Waters said he was “unconvinced” by Autif&#39s

criticisms of previous FSA research and felt its report included no

“new information about the relevance of past performance”.

The Autif report, published by Charles River Associates last week,

attacked the FSA&#39s past performance research, claiming it failed to

take account of the full material available and had misinterpreted

the work of American researcher Mark Carhart on which the regulator

based its research.

It concluded that there is significant evidence that performance is

repeatable, especially in the case of poor-performing funds.

But Waters hit back, saying its Rhodes report, published last August,

concurred with Autif&#39s conclusions on the repetition of poor

performance but decided that this only represented a fraction of the

market and did not build a convincing enough case for the value of

past-performance data as a whole.

The letter also pointed out that the regulator has already eased its

stance on performance data following the rep-ort from its past

performance taskforce last September.

However, it said it is not willing to include past-per formance data

in its comparative tables until it has developed a single

standardised and objective method of presentation.

Waters&#39 letter said: “Our initial impression is that this research

only summarises past work and takes a slightly different view of it

than did Mark Rhodes.

“We will certainly take a closer look at what you have sent us but we

are unconvinced by most of the criticisms made of occasional paper 9.”

Autif director general Rich-ard Saunders says: “It was a positive and

constructive letter. It made clear that they would reconsider the

exclusion of past performance from the comparative tables.”


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