Third Quarter 2015 in Review: Fi360 Fund Family Fiduciary Rankings Released
November 03, 2015Third Quarter 2015 in review
Global equity markets were down and volatility was up during the third quarter, and the large-cap S&P 500 Index suffered its largest quarterly decline in four years, and the MSCI Emerging Index ending at its lowest closing level since 2009. Primary factors were interest rate uncertainty with the U.S. Federal Reserve Bank maintaining their policy, the economic slowdown in China, and commodity prices substantial drop.
The S&P 500 had a return of -6.44% in the quarter and is -5.29% year-to-date. That was better than global equity performance, as the MSCI All Country World ex-US returned -12.1% in the quarter and is -8.28% year-to-date. Emerging market equities performance was worse, as the MSCI Emerging Markets Index was down 17.78% for the quarter and -15.22% YTD. The bond market as measured by the Barclays US Aggregate Bond Index was up 1.23% in the quarter and 1.13% YTD; while the broad international market via the Barclays Global Aggregate Ex USD Government Bond Index was up .64% in the quarter but is -4.82% YTD. For volatility, the CBOE Volatility Index increased in the quarter from 18.23 to 24.50, and the Bloomberg Commodity Index was -14.47% in the quarter and is down 15.8% YTD.
It is helpful to consider sector performance when reviewing third quarter market performance. Every sector in the EAFE index declined during the quarter, while small-cap stocks outperformed large-caps, and growth stocks outperformed value stocks. In the US market, energy (-18.71% in the quarter, -21.89% YTD) and basic materials (-16.93% quarter, -17.03 YTD) were the worst-performing Morningstar stock sectors while utilities (+4.75% for the quarter, -6.38% YTD) and Real Estate (+.3% quarter, -4.96 YTD) were the only positive returns. Small-cap underperformed mid and large, large growth outperformed large value – but mid and small value outperformed mid and small growth (although all were negative performers for the quarter).
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|
Total Returns |
|
|
Index |
Third Quarter 2015 |
Year-to-Date |
|
DJIA |
-6.98% |
-6.95% |
|
S&P 500 |
-6.44% |
-5.29% |
|
Nasdaq Composite |
-7.09% |
-2.45% |
|
Barclays U.S. Aggregate Bond Index |
1.23% |
1.13% |
|
MSCI All Country World ex US |
-12.10% |
-8.28% |
|
MSCI Emerging Markets |
-17.78% |
-15.22% |
|
MSCI EAFE |
-10.19% |
-4.91% |
|
Barclays U.S. Aggregate Bond Index |
1.23% |
1.13% |
|
Bloomberg Commodity Index |
-14.47% |
-15.80% |
|
Barclays Global Aggregate Ex-U.S.D. |
0.64% |
-4.82% |
|
Source: Morningstar Direct as of 9/30/15 |
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The fi360 Fiduciary Score – 3rd Quarter 2015 Review
The fi360 Fiduciary Score is a peer percentile ranking of an investment and provides an evaluation using nine quantitative criteria grounded in fiduciary practices. The Score has long been used to help advisors and their clients as part of the due diligence process and to document a prudent process for selecting and monitoring investments.
The Score evaluates investments across a spectrum of quantitative data points to determine if the investment meets a minimum fiduciary standard of care. The scores, which range from 0 to 100 (with zero being the most preferred mark), are calculated on a monthly basis for investments with at least three years of history. The nine criteria include: regulatory oversight, track record, assets in the investment, stability of the organization, composition consistent with asset class, style consistency, expense ratio/fees relative to peers, risk-adjusted performance to peers, and performance to peers.
Equity strategies that were a “0” Score as of 12/31/14, returned -8.68% in the third quarter, and are down -5.68 year-to-date. Top quartile (1-25) returned -9.54% in the third quarter and -5.46% year-to-date, Second quartile (26-50) were -9.27 for the quarter and -5.92% year-to-date. Performance for the third and fourth quartile was lower.
Fixed income strategies that were a “0” score as of 12/31/14 returned -.57% in the third quarter and are .11% year-to-date. Top quartile strategies quarter return was -.04%, and positive .13% year-to-date, second quartile was -.63% in the quarter and -.29% year-to-date.
fi360 Fund Family Fiduciary Ranking Report – 3rd Quarter 2015
Since 2003, the fi360 Fund Family Fiduciary Rankings has ranked fund families based on the percentage of their individual funds which receive a top quartile fi360 Fiduciary Score. The report also presents the change (improvement or decline) in ranking from the prior quarter.
Fiduciaries are required to prudently manage investment decisions. As such, if a fund family is implicated in wrongdoing, the fiduciary must show evidence that a process was followed in deciding whether or not the fund family should be retained. Knowing the fund family’s overall fiduciary ranking can significantly help in reaching a sound investment decision, and demonstrating that a prudent process was followed.
Fund families must contain at least five distinct funds with a three year history to be considered in the ranking. In addition, only open ended mutual funds, exchange traded funds and money market funds are considered in the report. For each fund family, the total number of funds in the top quartile as a percentage of their total number of scored funds is used as the basis for the ranking in this report.
Overall Rankings
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Q2 2015
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Q3 2015
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The table represents an increase of .97% for funds scoring in the First Quartile (0-25) and an increase of 1.51% for funds scoring in the Fourth Quartile (76+) from Q2 2015 to Q3 2015.
Click here to see the full 3rd Quarter 2015 fi360 Fund Family Fiduciary Rankings Report.
About the author
Matthew Wolniewicz is the Chief Revenue Officer at fi360, a leading provider of services designed to help clients gather, grow, and protect assets through better investment and business decision-making. He is responsible for creating the strategy to exceed client expectations, while driving topline revenue growth, and building a client-centric sales and customer service organization. As a member of the C-level executive team, Matt is the driving force behind growing the business and establishing fi360 as a leading provider to financial services professionals and institutions. As his team builds key relationships with clients, they enable those clients to grow their business and make improved investment and business decisions.
With more than 20 years of experience, he was most recently Head of Sales, Global Advisor and Wealth Solutions, at Morningstar, Inc. where he served as the executive business development leader of Morningstar’s largest segment, successfully driving revenue and overseeing 84 team members. Before his seven years at Morningstar, he held positions at Travelex, a commercial foreign exchange company, and at Pitney Bowes, a leading provider of technology solutions to companies.
About fi360
fi360’s mission is to help institutions and advisors gather, grow, and protect assets through better investment and business decision-making. fi360’s capabilities include professional development, software applications, and research and practice management. fi360 is the home of the AIF® designation and the fi360 Toolkit®, and is the parent company of Ann Schleck & Co., CEFEX, and IPS AdvisorPro. For more information about fi360, please visit www.fi360.com.
