How the judges reach their decisions

At the heart of theMoneyManagement/Assirt Fund Manager of the Year awards is a desire to bring recognition to organisations that have excelled in delivering results to the investing community.

While the goal is easily described, the process of determining the winners involves hundreds of hours of thought and analysis.

Once again, Assirt has utilised its extensive database of managed funds in Australia to discover those managers worthy of special mention. The Assirt Fund Rating complements the company’s quantitative analysis and plays an important role in the process.

An Assirt Fund Rating is unique in the depth, breadth and content of its analysis and has consistently provided the investment community with reliable information on which to base investment analysis and decision-making.

In building the algorithm to conduct the award analysis, care was taken to ensure an appropriate mix between the various elements that make up the awards.

This year there were 31 managers eligible for an award in at least one of the six categories. The six categories are shown in the colour box (right), together with a description of which funds were allocated to each class.

In each of the categories, Assirt examined products from the three main tax structures: unit trusts, allocated pensions and superannuation.

For a manager to be considered in an award asset class they had to have at least one product rated by Assirt in that asset class. Once a manager was eligible for an asset class, all of its relevant products were considered in the analysis, provided they had a three-year performance history and, for non-rated products, a minimum fund size of $10 million. Both retail and wholesale products were included.

For each manager in each asset class, Assirt looks at three factors: the average Assirt Fund Rating, one-year performance and a three-year information ratio. One-year performance reflects the annual nature of the award.

A three-year information ratio recognises risk adjusted returns over a period that reflects the investors’ minimum likely term of investment.

The Assirt Fund Rating incorporates the qualitative, forward-looking assessment of the manager. Returns were calculated to February 28, 2002.

The one-year return and information ratio figures for each manager are based on a size weighted average of the eligible funds for that manager in each respective category. Weighting the performance factors by fund size ensures a manager’s effort is going where their clients’ money is placed.

The output from our analysis is a single number, ranking each manager in each asset class. To discover the overall Fund Manager of the Year, points are awarded to the first five place getters in each asset class.

Increased weighting is given to the multi-sector, Australian and international share categories which, together, account for 70 per cent of retail investments. The overall winner must be a manager that has placed well in a number of asset categories.

Assirt congratulates the winners and finalists of 2002.

Anthony Serhan is anassociate director with Assirt.