London: 23 July 2003: Standard & Poor’s is introducing an extension to their existing Unit Trust/OEIC domestic fund database to include all international funds which are registered with the FSA to market and sell themselves within the UK. Funds registered in this way give UK investors the same protection under UK legislation as domestic funds. This means that the universe is represented according to the complete range of funds that can be sold to investors within the UK and gives a fuller representation of the true peer groups of each fund, thereby allowing a more complete evaluation of like funds with like.
Recent years have seen an increasing focus by many fund management companies on a cross-border approach, whereby a fund is registered with a number of different local regulators and is also able to market and sell itself outside of its original domicile. The UCITS directives are intended to facilitate this process – aiming to achieve an homogenous set of regulatory procedures across Europe to encourage the continuing development of the single European marketplace.
Standard & Poor’s has been at the forefront of establishing full “registered-for-sale” (RFS) fund databases - we currently maintain 13 fund databases on this basis. As many countries become more open to the concept of cross-border marketing, the ability to monitor and assess funds on a “registered-for-sale” basis has become increasingly valuable – both to management companies, and to investors. To management companies, cross-border marketing has the advantage of increasing their exposure to a wider investor market and so allowing them to achieve economies of scale, reducing their overall cost base and creating greater efficiencies.
Investors benefit from a wider choice of available funds, a greater level of innovation and diversity of product offerings, a more competitive fund market and potential associated cost savings. This is illustrated clearly in the structure of the United States fund industry where, although total assets under management is over twice that of Europe, the assets are contained within a third of the number of funds. This allows US management companies to leverage much greater economies of scale than their European counterparts. Operating on a lower cost base will also benefit investors through lower charges and better investment returns.
To ensure relevant and fair comparison between domestic and non-domestic funds, funds in the UK Registered Investment Funds database will be categorized within S&P Global Investment Fund Sectors (GIFS). These sector classifications have been used extensively throughout Europe and Asia and the Offshore markets for many years, and have been the basis for the calculation of the Standard & Poor’s UK Marketed Fund Awards for the past four years. The categories have been designed and comprehensively tested to provide a well-defined and unambiguous structure for classifying funds according to a statistically-comparable peer group.
From 7 August 2003, Standard & Poor’s Fund Stars will be calculated on the full range of funds available to UK investors – as is represented by the UK Registered Investment Funds database – and according to the S&P Global Investment Fund Sectors (GIFS). Fund Stars based solely on a domestic Unit Trust/OEIC fund universe will cease to be calculated after this date. For more information on the calculation of Fund Stars, please refer to www.funds-sp.com.
The first public release of the Standard & Poor’s UK Registered Investment Funds database will be on www.funds-sp.com from 7 August 2003 – allowing investors and advisers to access the full range of funds that have registered with the FSA to market and sell into the UK. |
