(June 15 – 11:45 ET) – Globefund.com announced today that it is introducing a new rating system for Canadian mutual funds. Globefund 5-Star Ratings aim to help investors understand how well a fund has been performing relative to similar funds. The ratings are now available free to users on the globefund.com Web site and will be included in the monthly Report on Mutual Funds in The Globe and Mail newspaper.
The ratings system has been developed using the Mark-to-Future risk management framework provided by Algorithmics, a leading provider of risk management software to financial institutions.
“The addition of this rating system to globefund.com is part of our commitment to providing Canadian investors with the most powerful tools available in the financial marketplace,” David Keith, vice president, financial products, Globe Interactive, said in a press release.
“This Globefund 5-Star Ratings system equips them with performance insights that can assist them in making more informed investment decisions. We are very pleased to have had the expertise and insights of an industry expert like Algorithmics to create this valuable tool.”
The ratings will evaluate all Canadian mutual funds that have existed for at least two years. The system analyzes two aspects of a fund’s past performance: its positive return when it outperforms risk-free 91-day treasury bills, and its negative return (or regret), when it underperforms them.
These two measures are combined into a single score, which is then used to assign a star rating for each fund in an asset class. Since the system puts more weight on recent data, it is more responsive to a fund’s change in performance, and therefore can provide an early indication of a fund’s over or under performance relative to its peers. Over 200 funds qualified for the top five stars.
-IE Staff