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New Report Rates Major US Fund Firms

by Leroy Baker, for Investors Offshore, New York

25 December 2003


As major fund firms reel in the wake of market-timing and other investment scandals, Pennsylvania-based research firm Fiduciary Analytics is producing a score card on prominent firms which rates them in fiduciary terms.

Don Trone, Fiduciary Analytics' CEO, says that most of the firms involved in the market-timing scandal also scored poorly in their fiduciary rankings even though involvement in the market-timing scandal was not a factor in developing the ratings, he adds. Don Trone is also the president of the Foundation for Fiduciary Studies, whose mission is to develop and advance fiduciary standards of care for trustees, investment committees and advisors. In addition, Don is one of the co-founders and Director of the Center for Fiduciary Studies, which operates in association with the University of Pittsburgh’s Katz Graduate School of Business.

The report ranks firms based on the percentage of their portfolios that would be acceptable to use in a fiduciary-directed program, such as a 401(k) plan. It reaches that conclusion by evaluating a mix of criteria, such as tenure of portfolio managers, fees, style discipline, peer group’s performance and overall performance over time.

Invesco was one of the lowest-ranked firms, with only 1.79% of its funds deemed acceptable for a fiduciary program. Alliance was also near the bottom of the pack with just 17.96% getting a stamp of approval. It did only slightly better than Alger, which had only 17.65% of funds pass. Putnam had 23% of its funds pass, Strong had 25.37% and Janus did somewhat better with 30.23%. MFS followed closely with 30.65% and PBHG, meanwhile outpaced those firms with 35.29%.

Fiduciary Analytics has a series of services designed to help investors choose funds. For instance, their Mutual Fund Analyzer uses the most current quarter’s data and a list of archived quarters to assist fund analysis. This tool, built on a peer group comparison platform, extracts data from three different databases (primarily Morningstar Principia Pro) and screens it through a fiduciary due diligence process. The output is a one-page profile of every mutual fund illustrating how the fund measures up against the criteria. Data fields containing a shortfall to the fiduciary screens are shaded in gray to facilitate the evaluation process.


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