S&P targets advisers with souped-up mutual fund research

Standard & Poor’s today announced that it has upgraded its open-end mutual fund research product for financial advisers and their clients. The new research — available through S&P’s MarketScope Advisor platform – is the latest attempt by S&P to reach out to advisers. The firm, a unit of The McGraw-Hill Cos. Inc., began making ETF reports available to advisers this year. Similar to its ETF reports, the new S&P fund product incorporates bottom-up research about a fund’s underlying holdings — as well as performance, risk and cost analysis — to rank more than 20,000 mutual funds on a scale of 1 (lowest) to 5 (highest). The result is greater clarity and a more robust picture of a fund’s risk/reward characteristics, Standard & Poor’s said in a statement. The enhancment also gives S&P the ability to analyze and rank new funds immediately without the need for a minimum three-year performance history, the company noted. “The poor performance of many highly rated funds during the recent market downturn highlights the limitations of backward-looking analysis and indicates to us that there is significant room for improvement in the way open-end mutual funds are analyzed and ranked,” Andrea Remyn, a managing director with Standard & Poor’s equity research unit, said in a statement. S&P ranks mutual funds by decile within an identified asset category and provides detailed peer comparisons throughout the fund reports. A fund’s ranking and pricing data are refreshed every week, as well as changes to S&P’s assessment of individual components as of the close of trading on the prior Friday. All reports on equity, fixed-income and blended mutual funds available through the new product will also include commentary from S&P on the fund’s ranking, performance and holdings. “We believe that past performance should be the beginning of the search for a mutual fund, and not the end,” Todd Rosenbluth, a director at the equity research unit, said in a statement. “By conducting proprietary-holdings-based analysis and factoring in various performance, risk and cost components, the Standard & Poor’s Mutual Fund Rankings provides insight into how a fund is positioned, rather than solely looking at the past.”