Fi360 analyzed over 78,000 investments in the fourth quarter of 2017 in order to report our latest Fiduciary Scores. Importantly, 17 percent achieved the highest mark of a zero score, passing the scrutiny of nine rigorous filters.
Investment selection and monitoring is an important fiduciary responsibility, and the Fi360 Fiduciary Score has been designed to help the marketplace understand if funds are performing well from a fiduciary perspective.
We are pleased to see a diverse set of asset managers with investments in the top two quartiles of the Fi360 Fiduciary Score. These firms are consistently scoring well in 11 categories; two categories are “eliminators”, and nine others may generate points. Like golf, earning fewer points is the goal! Firms who rank in the top two quartiles adhere to meaningful fiduciary standards.
Recent years have witnessed significant growth in collective investment trusts (CITs). As of Dec. 31, 2017, just over 30 percent, or 1,658 of 5,423, CITs in Morningstar’s database have less than three years of history.
With target date CITs, the trend of new issuances has been even stronger. Indeed, 790 of the 2,014 target date CITs in Morningstar’s universe have less than three years of history—a whopping 39 percent.
As 2018 starts, there’s no sign of this trend slowing down. Thirty CITs show up in Morningstar’s CIT database with inception dates of Jan. 1 – 3, 2018. Of those, 24 of those target-date offerings.
One of the challenges created by these new issuances is a delay in ratings/rankings availability (none of the CITs with less than three years of history receive an Fi360 Fiduciary Score). We’re exploring solutions to facilitate advisor due diligence of new share classes added to existing funds.
Fully, 59 managers had more than 50 percent of their CITs score in the top half (Quartile 1 and 2), and 17 made the first quartile.
Companies with only one investment, and/or less than 50 percent of investments in the top half, have been excluded from this analysis. Of those managers with 10 or more scored investments, T. Rowe Price (with 135 investments scored) is notable with 127 of those investments, or 94 percent, landing in the first quartile relative to category peers.
They are the only CIT manager with more than 15 investments scored and an average score of 10 or less. Others with 10 or more investments scored that have averages in the top quartile are Voya, Vanguard Group, Putnam, Blackrock and JP Morgan.
John Faustino is Chief Product and Strategy Officer with Fi360.