Standard & Poor's
is streamlining its Select Funds program and creating a series of three model portfolios from the funds to make the program easier for financial advisors and individual investors to use. The firm is making these changes in response to demand for simplification from advisors, said a Phil Edwards
, managing director of fund services and global research. S&P also promoted Rosanne Pane
to take charge of the initiative.
The Select list is currently seen by at least 7,000 to 8,000 advisors in S&P publications, according to Edwards. The Select designation has also been licensed by a number of fund firms for use in their own marketing campaigns. The model portfolios will be included on S&P's Web site; its Web-based AdvisorInsight; a weekly paper publication The Outlook; and the monthly Equity Insights.
As part of the renovation, the firm has sliced the select list from 275 funds to just 36. Edwards said the decision to cut back was made after listening to advisors. "While 275 funds were interesting and useful they wanted something that they could put in practice, he explained. He added that what advisors are calling for is "asset allocation down to the fund level" and noted that demand for this is especially strong from financial planners and brokers. He further noted that optimization of the models around 275 funds would not have been efficient.
Each of the model portfolios is built around ten mutual funds from the firm's Select list and is optimized to lie of the efficient frontier. The ten funds are a mix of load and no-load funds, although Edwards noted that the load shares in the models can also be purchased on a no-load basis.
The models will be reviewed on a quarterly basis and although the equity to fixed-income ratio in each model is fixed, allocations to individual funds may change over time as might which funds are included in the model.
S&P may add models to the three that debuted later, said Edwards. The most conservative of the current models sports a sixty percent allocation to equities. The most aggressive places the entire model in stock funds. "We did not want to bite off more than we could chew," said Edwards in explaining why S&P started with three models. He added that each has a "relatively long-term outlook" and that the performance of equity markets during the past year may make it a good time to take an aggressive posture.
The ten funds currently included on the list are: Growth Fund Of America, Gabelli Westwood Equity, T Rowe Price Mid-Cap Growth, Dreyfus Growth & Value:Midcap, Baron Growth Fund, Royce Pennsylvania Mutual Investors, Artisan International, SteinRoe Income Trust Intermediate Bond, Alleghany Chicago Bond and Deutsche Cash Management.
Pane becomes the firm's mutual fund strategist. She has been with S&P since 1997 as a director in the firm's fund services group. She will report to David Blitzer
, chief investment strategist, managing director of quantitative research and Edwards.
See the list of all the 2001 Most Influential People
Stay ahead of the news ... Sign up for our email alerts now