Fund boards need leading-edge analytics and insights to assess whether their funds are providing value to their investors. The FCA requires UK Fund Boards to review and evaluate their funds to ensure they provide value. Value is a multi-dimensional concept, and it is important not to jump to face-value conclusions.

Broadridge has a 30-year history of providing market-leading Board Reporting for its clients. Internally conducted Assessments of Value could face regulatory and investor scrutiny if the assessments are judged to be excessively subjective. Appointing an external advisor has the advantage of impartiality, with a higher likelihood of independence, giving the Assessments of Value greater weight and integrity.

With the extension of this service to the UK market with the Assessment of Value compliance requirements, we can partner with you to provide industry insights and thought leadership on the most challenging items related to Assessment of Value, including:

• Handling economies of scale
• Evaluation of management fee charges
• Evaluation and validation of value provided by the fund

Below we demonstrate how Broadridge’s analytics can unpick the true value of a fund, empowering boards with the most rounded picture on which to make their judgement. Here we assess a large-cap, UK All Companies fund with a blended tilt. The initial conclusion of underperformance and high expenses is contextualized with other factors such as fund size, volatility and risk awareness. Broadridge can provide this full analytical view:

• The fund also has high relative costs and low relative performance versus its peers, in addition to also underperforming its index.
• Based strictly on these measures, you may say the fund is not providing value.

However, the story begins to change when Broadridge pulls in additional criteria—meaning that the board can really have a detailed discussion and analysis of the fund that goes beyond face value.

• The fund is less volatile than its peers, thereby reducing risk for investors.
• The fund has the second smallest AUM versus its Comparable Market Rates peers, indicating costs should go down as the fund gathers more assets.
• The fund is positioned as “risk-aware” and, based on analysis of various risk measures, is executing on that aspect of its investment mandate quite well.

In conclusion, therefore, through Broadridge’s additional insights, it becomes clear that this fund is in fact providing value, in contrast to some of the initial impressions.