How are Fund Firms Doing at Value Reports?

MICUK 2021: In the second year of fund assessment of value reports, there are signs of improvement, says the CFA’s Andy Burton

Holly Black 6 July, 2021 | 10:15AM
Facebook Twitter LinkedIn



Andy Pettit: Hi, I'm Andy Pettit. And I'm joined by Andy Burton from the CFA U.K., who is fresh from the conference session to talk about assessments of value. So, Andy, welcome. You talked a little bit about the CFA's report and some mixed findings from year one. Do you think overall that things are now getting better?

Andy Burton: They very definitely are, Andy. I mean, I haven't looked at every report as it's been coming out this year, we will be doing a follow-on study. But I'm confident that the findings will be much better this year.

Pettit: Great. And due to some of those concerns, various people have called for more prescription from the FCA. Do you think that's necessary? Or should firms be embracing the free form that they've got for innovation?

Burton: Yeah, well, when we published the report, one of our recommendations to the FCA was to go for greater prescription because we felt that some of the firms really hadn't understood what they were supposed to be doing. But actually, I'm encouraged by the reports I've seen that have come out this year. And I know that the FCA have been working very hard behind the scenes talking to firms about what their expectations are. So whilst what's in the written, actually written down is very minimal. It does give plenty of freedom for firms to express themselves. And maybe that is the magic formula.

Pettit: Okay. And you also called out in the report a surprise that there was not much reference to ESG or to liquidity. Do you think that's starting to change or not any particular reasons one way or the other?

Burton: Yeah, I think it has to change, because neither of those two big subjects were pillars in their own right. I think some funds were confused about where to include it. The FCA's answer on that is it should be on the quality of service. Clearly with the events that went on in the fund management industry, around Woodford, for example, and some of the property funds. Liquidity is an important consideration.

So it definitely needs to be mentioned. ESG is a whole big topic. And I'm interested to see that you're suggesting, you know, potentially an eighth pillar emerging on ESG. We actually called for that in our report as well. I think some funds if ESG is front and centre of their business proposition. It's their unique selling point, then maybe they want to wrap it up inside quality of service. And that's what the quality service is, you know, they can make a big point of it, but I'm not so (precious) about where it is, but both of those subjects definitely will fit them all.

Pettit: That makes sense. Well, Andy, thank you very much for your time. And thank you for watching.

Morningstar Investment Conference 2021

Catch up Now


The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

About Author

Holly Black  is Senior Editor,


© Copyright 2024 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Modern Slavery Statement        Cookie Settings        Disclosures