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Simple solutions

Having a suitable spread of assets is a prerequisite to good portfolio construction.

In a market-place made up of over 40,000 funds, choosing the correct one for the right strategy to represent any given sector for a client’s various goals can be a challenging prospect.

For advisers who want to steer clear of the flavour of the month/week/moment approach, software to help research the full universe of funds available in any area, compare them with a range of criteria and demonstrate a reasoned approach to the selection of the fund ultimately recommended can clearly be a valuable aid.

A new web-based software application devised by SIFA/sIFAc, the trade body and professional support group for solicitors and accountants operating as IFAs, aims to provide a simple way to achieve this. Although primarily designed for use by SIFA/sIFAc’s 680 advisers in their 165 firms, the software, which is powered by MoneyMate, is also available to any other adviser firm.

An adviser will normally be aware of the type of funds and sectors they want to include in a client’s portfolio in order to achieve an appro-priate asset allocation. But selecting the individual fund to recommend can be a time-consuming activity. There are a wide range of factors to take into account.

There has been much debate over the importance or otherwise of historic performance. In recent years, a far wider range of other measures have started to be examined by increasing numbers of advisers. For example, there has been a growing recognition of the value attributed to the length of time the individual fund manager has actually been at the helm.

Advisers are also increas-ingly looking at the volatility, sensitivity to markets (beta), the value added by the fund manager (alpha), negative volatility (sortino) and performance after taking into account risk (the information ratio) when arriving at their recomm-endations. This software delivers this information on these measures in easy to understand reports.

These are ideal for demonstrating where an adviser’s professional skills and the technology they are employing deliver real value to clients.

The package is designed to allow an adviser to compare a wide range of features in seconds and create simple but meaningful documents that can be saved as a long-term compliance record and shared with the client to justify a recommendation.

The concept is to generically construct a portfolio using investment-type building blocks. These might be IMA sectors, ABI sectors or system defined model portfolios. Then decide tax treatment, that is, unit trusts and Oeics, insurance funds, pension funds and investment trusts.

A search can be further refined to pick out any specific fund names. For example, to refine a search, say, to include all with- profits funds or work across multiple sectors but looking for specific fund types by name. Additionally, searches can be made by different unique fund identifiers, that is, SEDOL, MEX and ISN codes. Other filters include funds domicile, currency, retail, ethical and FSA-recognised offshore funds and, of course, Isaable or Pep-transferable fundsHaving identified the fund universe you wish to examine, you then apply a further series of filters. These include size of fund, greater equal or less than a certain number of millions, income or accumulation units, yield and the number of individual holdings within a fund, that is, to identify if it is a focus fund with a very small number of holdings or a general fund with a wider approach.

Charges, both initial and annual, can also be applied as filters, as can length of fund manager tenure and cumulative performance over multiple periods. When filtering in this way, users can identify funds which are higher than, lower than a particular number or between a user defined range.

In this way, this applic-ation, which can be accessed with just a web browser and an internet connection, enables users to filter funds by the application of a wide range of criteria and sift though all the available options to produce a shortlist of funds that meet the defined criteria.

At this point, the shortlist can be saved, converted to a PDF or printed. The short list clearly states all the different filters that have been applied in refining the choice down to a small number of suitable funds.

You can also generate fund fact sheets for each individual fund within the shortlist that include performance figures over a range of periods, asset allocation details for the subject fund. In addition, these include details on the individual manger, including a view on past perform-ance and future expecta-tions. A series of risk details and measures are also contained in these sheets.

Once you get down to a handful of funds, the service can generate a risk comparison matrix. This is a simple single-page document that will list the performance, volatility, beta, alpha, sortino and information ratio for each of the funds under consideration. It includes a simple definition of each factor so the client can understand what each factor examines. The factors are colour-coded green, amber or red to give an instant graphic illustration of how the different funds compare. At this point, the adviser applies their own judgement to select exactly which fund to recommend to the client based on the different factors.

I liked the way in which any report document created can be saved, created as a PDF or printed. This may seem amazingly obvious but I never cease to be amazed by the number of IFA applications that do not offer such features at the appropriate stages. To be fair, in some cases, this can be because of comp-liance restrictions that organisations apply but there can be instances where such options are omitted for no obvious reason.

One feature that I find annoying is that you have to move forward and backwards between screens using either the next or previous page buttons in the bottom right hand corner of the screen or using the section tabs.

To my mind, it would be much easier to be able to use the back and forwards buttons on the browser. This is frustrating the first few times you use the software but is probably something you would get used to quite quickly.

FundSIFtA costs £95 a month for the first licence per firm and £75 a month for each additional user. These figures are reduced to £75 and £50 a month respectively for SIFA/sIFAc members. All figures are subject to VAT. More information can be fund at


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