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S&P ‘is on right track’ with new fund ratings

Advisers say decision by rating agency gives recognition to fund managers’ track records.

Standard & Poor’s decision to start awarding ratings to new funds has met with a mixed reaction from advisers.

The rating agency previously required funds to have three-year track records.

Most advisers welcome the move as they say managers of new funds may already have a track record in the field.

Hargreaves Lansdown head of research Mark Dampier says: “It is almost a case of welcome to the 21st Century for S&P. Some might say you cannot give a new fund a rating but surely, if the manager has a good track record, then it warrants one. The idea that someone like Neil Woodford could launch a new fund and it would not be rated is ludicrous.”

Chelsea Financial Services managing director Darius McDermott says: “Take Rathbone high income, for example. It is managed by Carl Stick and adopts a similar process to the income fund he has run for some time. It has all the credentials it needs to be rated by S&P but it has yet to be rated.”

But BestInvest head of communication Justin Modray is urges caution as he believes it could become easy for investment advisers to stray away from tried and trusted funds.

Modray says: “That track record really needs to be there for fund managers as you can step into the unknown. We prefer funds with track records of at least two-and-a-half years and the chances are we will not be changing that stance.”

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