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How do Square Mile pick and rate funds?

Would you like to know how Square Mile arrives at its selections? Here are their criteria

Independent investment consulting and research

Square Mile is an independent investment consulting and research business that focuses on providing in-depth, qualitative fund research.

It has an experienced team of investment professionals dedicated to providing qualitative analysis of the fund market. Their job is to identify the funds they believe are most likely to meet certain investment objectives over the long-term.

Where do they start?

Square Mile believes that to be truly effective they must have a clear understanding of the needs of investors. It’s an approach which involves researchers evaluating then categorising funds in the context of three key outcomes:

  • Growth
  • Income
  • Preservation

This can be useful for investors trying to determine which fund is right for them and informing choice. Whatever life stage you have reached, the research will help you make selections in line with your financial aims.

  • What’s in a name?

    Square Mile looks at who the fund manager is, the company they are part of, and how they have performed for private investors over the years.

    Dutifully diligent

    Where an investment house is less well known, but Square Mile is selecting its funds, EQi investors can be assured that sufficient due diligence has been carried out not only on the structure of the firm but its commitment to and longevity in the UK market.

  • What’s the selection criteria?

    Quality as standard. The Square Mile fund selection process follows a number of criteria and considerations.

    • All funds should be given a Square Mile rating of AAA, AA or A; passive funds with a rating are awarded an R for "Recommended"; a PP rating for "Positive Prospect" is given to some younger funds with shorter track records,
    • Funds not meeting their stated performance objectives will be included and given a rating but only where the reasons for the underperformance is understood and deemed reasonable.

What else do Square Mile look for?

  • Funds should have an adequate amount of assets under management (AUM) to allow for diversification and scales of economy. The minimum level of AUM needed will vary depending on the asset class.
  • Funds which are at or near capacity will be treated with caution.
  • The funds should represent fair value for money, meaning fee schedules should be sensible and commensurate with the cost of investing in the asset class.
  • Funds should draw upon a proven performance history. Such a history may belong to the manager rather than the fund if deemed appropriate, and if the new fund house has the relevant infrastructure in place to allow the manager to perform to the same or better level as in a previous role.
  • Funds should be regulated by the Financial Conduct Authority and there should not be a high turnover of investments within the fund.
  • The people managing the funds should take a team approach rather than risk relying on one key individual. The fund manager must also have at least three years of experience looking after a particular type of fund, preferably longer.