How we pick the Premier League funds

Share this

Some funds take you on a rollercoaster ride - and some of these have more downs than ups. Investors who prefer less volatility also want reassurance that a fund not only has a decent performance record, but one that is reasonably consistent.

That is what Money Observer's annual Premier League of Funds aims to help you identify, and this year we have refined the process in the 11 popular fund sectors from which we pick our Premier League team.

Our ideal team member is one running a fund with high performance after three years relative to its peer group, that has also appeared in the top quartile (top 25%) of the sector for each of the past three annual periods.

Our fund manager also has to have been at the helm for those three years, or at least been a senior member of the team for that period. We don't consider funds with assets of less than £10 million, but we will include offshore funds that are members of the Investment Management Association's fund sectors.

Some funds have become too popular and their managers have therefore imposed extra charges or closed them to new investors. We won't consider these funds for the Premier League, as there's not much point in trumpeting their achievements if private investors can't buy them.

Similarly some funds that may be available through financial or discretionary advisers are not available to self-directed private investors. So we check whether funds are available on Interactive Investor, which has a very wide range, before considering them for admission to the Money Observer team.

We've also analysed rolling annual performance periods over the past 24 months to add an extra level of granularity to the league. This helps to identify funds that might not have made it into the league due to a short-term blip.

This year we have also replaced two of the sectors from which we pick our team: global bonds and Japan. Over the years we have found very little consistency in performance in the Japan sector, while the global bonds sector includes funds with disparate aims - from the specialism of investing in emerging market debt to funds that only invest in Western sovereign bonds. That's too diverse a range from which to glean meaningful trends.

In their place are team members drawn from the increasingly popular global equity income sector and the (clumsily named) mixed investment 40-85% shares sector, which appeals to investors who want a balanced fund with moderate levels of equity risk.

Lastly we are indebted to Lipper, the fund-monitoring organisation owned by Thomson Reuters, for providing the primary data for our analysis. It refers to performance as at 1 September 2012 on a bid-to-bid basis.


Every year Money Observer runs the rule over 11 popular fund sectors from which it picks the Premier League team. Find out which investment vehicles made the cut in: Premier League of Funds delivers super returns.