The results are in and according to data from SharingAlpha, Veritas’ Asia ex-Japan Equity fund was the top rated fund for 2020, with Patricia Ribelles of Orienta Capital being named top fund selector.
Fundeye has previously reported on how SharingAlpha’s model rates its funds and fund providers but how does it determine who is the top fund selector?
The rating is determined by a professional in the funds industry ability to predict the performance of a fund compared to a comparable exchange-traded fund. If the professional gives the fund a score above three, it expects the fund to outperform the ETF, or in the case of an index tracker the beta. If the fund rater gives a score nearer five that reflects a strong conviction that the fund will outperform its passive counterpart.
Given the trouble active management has had with the growing tide of passive products, finding those who can identify products that can beat their index is a decent commodity. Active managers around the globe must dread when the yearly Spiva scores are released, showing the percentage of active managers who have beaten their benchmarks.
Conversely, if a professional in the funds industry only gives a rating of between one and three, then the fund is deemed not to be able to beat its benchmark, or its ETF equivalent. On a monthly basis, SharingAlpha compares the ratings with the actual performance of the fund versus the ETF, the closer the prediction with the actual reality the higher the score they get for this rating.
The more accurate the individual is, the higher a ‘hit score’ is awarded and subsequently future predictions are given more weight in SharingAlpha’s monthly reports on the top funds and providers.
Not only is this probably good news for an individual’s career prospects, it may also be a useful tool for finding the truly alpha generating products out there.
The company’s founder, Oren Kaplan, said that in a difficult time where a pandemic has caused havoc in the markets, the firm has benefitted from a shift towards digital distribution channels.
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