The first Assessment of Value reports are out

The first Assessment of Value reports have begun to appear for fund groups with an account year-end of 30 September. The FCA's reluctance to publish any prescriptive measures seem to have driven the standards up based on the initial reports published by Rathbones and Vanguard.

31 January 2020


As fund groups have four months from the accounting date of their funds to publish their Assessment of Value (AoV) reports and the live date for this obligation was 30th September 2019 (last year), we have now reached the point where the first reports are appearing.

Based on the first AoV reports, it seems the Financial Conduct Authority (FCA) was absolutely right not to specify a template or to be too prescriptive about the format of the document.  The FCA let it be known that it expected market forces to drive up standards for the reports and it did not want it to be treated as a tick box exercise.

The first funds affected are those with a year-end of 30 September and, as this article in Portfolio Adviser makes clear, the AoV reports from Rathbones and Vanguard have set down a marker for those that follow.

Fund groups have the option of appending the AoV reports to the annual long report for a fund or issuing a consolidated report for two or more funds.  Long before funds issued short reports, no retail investor ever bothered to read a fund’s long report, so the two companies mentioned in the above article are highly commended for choosing the latter option and issuing very readable consolidated reports for eight funds and 29 funds respectively.

It comes as no surprise that, when assessing value, Vanguard gives a green (“good value”) rating to all its funds, while giving four of them an amber rating for performance. 

Rathbones accept that two of its eight funds assessed failed to meet their performance objectives and, while all eight funds represent good value, specific actions are recommended, including dropping the minimum investment on a cheaper share class of one of its funds.

The next tranche of AoV will be well down the pipeline, so I have no doubt they will be looking closely at these two reports to see if they measure up.  The bar has been set high by these two companies without any precedent to work from, so if future reports are really going to improve on them, they have their work cut out.

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