Testing our methodology

The TopTen funds for each sector are re-calculated every month. As said earlier, the assumption underlying the statistical analysis is that if a fund is highly rated, and therefore has appeared in the TopTen within its sector, there is a strong likelihood that this top-ranking performance can be continued into the future.

If the constituents of the “TopTens” changed regularly, month after month, the system could have little validity in anticipating continuing good performance. On the other hand if the system was perfect the TopTen constituents would be the same every month, as it would perfectly anticipate next months top funds – no system could achieve that.

Over 12 months the total number of TopTen places available in any one sector is 120. If the system worked perfectly just 10 funds would have filled those 120 slots, the same funds filling the TopTen positions every month. The actual results aren’t, of course, that perfect! But, as you’ll see, they will give you, the investor, a significant edge.

In appendix 2 are listed those funds that appeared in the TopTen for at least 4 months out of the last 12. In addition in the last 6 months each fund must also have had one monthly appearance, and still have a rating of bronze or above. Clearly this will weight in favour of recent outstanding performance, and separate long term research that we have conducted highlights that this is appropriate.

The one and three year growth figures are also shown for each fund, plus the index and the sector average figures, to see how much better than average growth you would have achieved.

I have recently seen a copy of your Top Funds Guide and was very impressed by the quality of informa...
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