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Platforms blasted on risk ratings

An adviser has hit out at the way that platforms assess the risk of individual funds after a Zurich fund which was assigned a low-risk rating fell by almost 20 per cent in value.

The sterling UK money securities fund, which invests in the Threadneedle UK money securities fund, has fallen by 18 per cent since August 2008.

Doherty Pension & Investment Consultancy IFA Terry Lappin says many platforms rated the fund low-risk and investors have lost significant sums of money as a result.

He says: “There are major problems with the risk profile of the fund. A lot of clients, many of which are low-risk investors, have been very disadvantaged.”

A Skandia spokesman says the Selestia platform assigns a risk rating of one out of 10 to the fund but says this is the rating for the sector as a whole, not the individual funds. Nucleus and Ascentric say they do not assign their own risk rating to funds, instead signposting ratings from agencies such as Trustnet and Morningstar.

Trustnet assigns the fund a one-crown rating, which is the worst rating in terms of alpha, volatility and consistency on a scale of one to three crowns.

Zurich says risk was adequately conveyed. In March, it plugged a 4 per cent fall in a separate money market fund.


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