[original post removed]
Depends on your need.
If you need to put funds together for groups that have no clue and will default to a rating, then you might be cognizant of what the ratings are as a secondary measure to make sure they pass the idiot’s smell test, but even then, I would never use them as a primary measure.
If the analysts working at the fund rating companies were any good, they wouldn’t be working at the fund rating companies. It’s like the private sector version of a regulator’s job. They are good enough to generally know what’s going on, but they don’t know as much as the people really making money.
It’s probably helpful for filtering out really bad performers, but probably not so helpful for finding out who’s good. They are more likely to be helpful for catching operational risk issues than for identifying effective alpha strategies, since the underlying funds will not be willing to share enough specifics for the analyst to make an informed objective judgement, even if the fund evaluator knows what they are doing.
Just my best guess
sorry for my first post, wrote it from my smartphone during lunch when the discussion came up. my main concern is that ratings such as S&P and €uro funds punish funds for the bad performance of their underlying (agriculture commodities tanked and took agr. funds with them) rather than their management.
Just like HR.
I don’t know if you guys in Austria have something equivalent, but in the UK fund managers are rated by Citywire based on prior performance. Financial Express also provide an analysis of Fund Manager’s performance relative to their peers and benchmark based on previous years performance. You would be better off looking at this sort of thing rather than fund ratings because those can be given for all sorts of reasons rather than just performance from what I understand.
Well, we use these ratings internally for larger funds, our in house funds however are not rated by them and we want to sell those first if we can. They perform just as good if not better but are only rated by those dubiuos agencies and our customers read their ratings on their financial info sites and push to sell, which is seldomly a good a idea considering that all other funds in that category perform just as bad. In ****-europe new self-proclaimed fund ratings and awards pop up on a quarterly basis, most of which cater to certain large AM houses.