First year of Assessment of Value reports conclude that 97% of investment funds offer value to investors

A new report, to be published tomorrow by independent consumer research firm Boring Money, finds that a surprising 97% of investment funds were claimed to offer value to investors.

The data comes from asset management firms themselves, following the first year of published Assessment of Value reports, as mandated by the FCA. The firms have reported back against a list of at least 7 criteria including performance, price and quality of service.

Boring Money conducted an in-depth review of the reports from 26 leading asset management firms, which collectively fed back on 968 funds*. The “Value Assessments – Best Practice” report contains a detailed look at common demonstrations of good practice, along with poor practice, in this first year of reports – noting huge variants in the quality and clarity of the reports.

Of the 968 funds analysed by the 26 asset managers:

• 79% of the funds were deemed by the asset managers in question to be delivering good value
• 18% of the funds were deemed to be delivering value, but were being monitored or having some fee reductions implemented
• 3% of funds were deemed not to be delivering value

By contrast, research based on more than 11,500 responses from UK fund investors found that asset managers were rated on average as giving good value just 56% of the time.

Boring Money CEO Holly Mackay comments: “We have already seen some positive changes as a result of these reports. The low-hanging fruit for this first year was the expensive legacy retail share classes which arguably should have been fixed years ago. Some costs have been reduced and poor performing funds are being publicly monitored. A small number are being closed.

“However we found that some reports made it very difficult to ascertain what the conclusion on value delivery actually was. There’s an understandable reticence to come out and say that a fund is not delivering value. But to conclude that just 3% of the UK fund universe is not delivering value seems a little generous, even if we consider that we were looking at the largest, most robust brands in our work.”

Sounding a call for greater transparency and independent scrutiny, she adds: “We think this first cohort of reports erred too much on the side of marking their own homework, and more external scrutiny will be required from the Boards, particularly around selected peer groups for comparison and the consideration of Quality of Service. There are some hugely difficult questions for groups which conclude that value has been delivered even when a fund’s objectives have not been met and costs are at least in line with, or higher than, peers. It will be harder to keep any arguments up about economic cycles or unfavourable markets if this failure to meet objective continues throughout 2021.”

The report identifies Baillie Gifford, Franklin Templeton, HSBC Asset Management, SJP and Vanguard as amongst those offering the most useful, clear assessments of value for investors.


Notes to editors:

* The Value Assessments – Best Practice report analyses the Assessment of Value reports from 26 leading asset management firms. These reports are all publicly available.

** Independent comparative data is based on 11,670 responses from UK fund investors gathered over 7 quarterly surveys.

For further information, please contact:

Cara Whitehouse, PR & Communications Manager

About Boring Money

Boring Money is an independent research and publishing house which provides information, tips and Best Buy tools to savers and investors. It recently raised £900,000 through crowdfunding, with more than 12,000 weekly readers and investors supporting and engaging with the company. The business conducts regular research with industry providers and UK consumers to track the developing DIY investment market from both the customer and provider perspective. Boring Money holds test accounts with over 25 investment platform providers and also holds regular focus groups and interviews with consumers to ensure regular input and feedback from the user perspective.

Founder Holly Mackay has worked in the investment industry for 20 years and is supported by a team of 12 researchers, analysts and marketing execs. Boring Money is not regulated to give personal financial advice, nor is it regulated by the industry watchdog.

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