Frequently asked questions
Our services and charges
Fund Analysis
Portfolio and risk
Our services and charges
Who are Cofunds?
Cofunds is an initiative of the financial services industry to create more choice for investors. It was set up by four major companies - M&G, Gartmore, Threadneedle, and Jupiter - later joined by IFDS and Legal & General.
Cofunds provides massive choice at no extra cost. Clients have access to over 1000 funds from more than 60 fund managers, whether investing into funds directly, within an ISA or within a pension fund.
Existing ISAs, PEPs and other funds can be transferred to the Cofunds platform, allowing administration of all investments in one place. Benefits include:
- Eliminating vast amounts of paper from different investment houses throughout the year
- The ability to switch between funds quickly and easily
- Consolidated, on-demand valuations
In what ways can you help me?
We can help in three ways:
- You can buy funds of your choice online. In this case we can give no personalised advice.
- We can review your existing funds, identifying funds which are duds, and others where, frankly, you can do a lot better.
- We can provide tailored advice on proposed fund purchases or in structuring your portfolio as a whole.
How do I pay for your services?
Our costs represent excellent value and offer great benefits. The precise cost varies dependent on how much you want us to do, as you might expect. For example:
- You can benefit from our research and make your own fund choices. If you then buy funds online the initial charges are frequently 0%, and seldom above 0.5%. This is because we forego initial commission, and, on your behalf, negotiate the lowest possible charges
- We can review your existing funds. There is no extra charge for this providing that your total funds exceed £20,000 in value.
- We can provide you with bespoke advice, not just reviewing your funds, but also their suitability and your overall portfolio structure. There might be an additional charge for this service, depending on your precise requirements, the amount invested or to be invested, and the complexity of your affairs.
How can I regularly access your research at no cost?
Even if you’re not yet a client, our intention is to make as much of our research as possible freely available via the internet.
More in-depth hard copies of our research are free to existing clients, or £50 if you’re not a client.
Whether you’re a client or not, funds bought through us, or registered with us, come within our comprehensive Review and Monitoring Service. This applies whether your funds are within a general portfolio, ISAs/PEPs, or SIPPs.
Can I find out about new research?
If you register for regular updates, we’ll let you know when new research is available or when we make changes to existing research and recommendations. You don’t need to be a client to benefit from this service.
Do you have a market commentary?
Every month we email a market commentary to clients to help them make sense of what is going on, which isn't always clear from press headlines and comment. It will also highlight any particular opportunities that our research is uncovering. This is only available to clients.
Fund Analysis
What is Chartwise?
Chartwise is fund performance software we use to measure and record fund performance. It allows us to award “medals” to funds based on their performance.
The software is statistically based fund performance measurement software developed by Asset Risk Consultants (“ARC”). Chartwise goes beyond standard performance tables based purely on return by adding four extra ingredients into the calculation of an ARC medal:
- a benchmark
- time weighting
- risk
- correlation.
Underlying Chartwise is a model of the fund management process. The model assumes that the monthly investment returns delivered by a fund comprise three components:
- The return which a fund manager could have obtained with by placing the funds on deposit. This is called the risk-free return. In order to make a return in excess of the risk-free rate the fund manager must invest in riskier assets.
- The difference between the returns realised by the fund and the risk-free returns, called the excess returns, can then be separated into two parts. The first part is a constant contribution (positive, one hopes) coming partly from the excess returns normally available in the market, and partly from the application of the fund manager’s skill.
- The second part is a random, unpredictable element, which adds volatility to the fund’s returns. The model assumes the fund manager has control over the level of volatility risk to which the fund is exposed but that the effect in any one month is unpredictable. In the long run these unpredictable positive and negative elements will on average tend to cancel out.
Given this model, statistical methods can be applied to estimate the components of historical performance. This enables a comparison of a fund with its benchmark and peers.
About ratings: In this guide we occasionally show ratings for individual funds. The ratings are platinum (the highest), then gold, silver, bronze, or no rating at all. These ratings are a short-hand for the quality of the fund as analysed by the Chartwise system. For example, a platinum rated fund shows evidence of consistency at a very high level.
How do I get my existing funds reviewed?
Let us have details of all your existing holdings and the first thing we will do is send you a full report on them, analysing each fund, including initial ideas for adjustment and transfers.
Even if your existing funds are good, you need to know if they start to slip - so the second thing we do is monitor your existing funds. We’ll send you an alert if we identify a cause for concern.
How much does it cost to have my funds reviewed?
Typically there is no cost to you at all – your existing fund managers probably pay about 0.5% per annum, called renewal commission, to whoever your current advisor is. If there’s no advisor the fund managers just keep the money and you don’t see the benefit of this. You have to have at least £20,000 of funds paying renewal commission to benefit from this service.
How do you analyse funds?
At the heart of this analysis is the Chartwise system, which provides an in-depth and objective statistical assessment of every fund, balancing growth, risk, and consistency. League tables that are usually based purely on past growth are extremely limited in their value, and can be dangerous. You can find out more here.
How can you help me build a portfolio?
There are a number of approaches to building a portfolio. We’ve experienced many different models over time, many of which contradict each other or fail to take account of the "accidents of history" we sometimes see.
The older you are, the lower the level of risk which is appropriate to you. With this in mind, we initially apply a rule of thumb that the low risk element of your portfolio should be equal to your age. If you're aged 25 the low risk holdings would be 25%, and if you're aged 75 they might be 75% of your total investments.
This is only a guideline, giving a structure for consideration and discussion. You can have a go at building a model portfolio in our portfolio tools section.
Portfolio and risk
What is monthly risk?
Monthly risk is a measure of the maximum typical fall in capital value a fund might experience.
For example, the monthly risk figure for a typical UK stock market fund is around 6%. This means that – roughly speaking – in 19 months out of 20 you should not, on average, expect a fall in capital value of more than 6% in any one month. In one month out of 20 you should expect the loss to be more severe – an extreme example was October 1987 where losses of 20% were seen.
Monthly risk is calculated using an analysis of each of the last 36 months performance. Statistical analysis does have limitations, however – it’s a simple model of a complex reality.
While statistical analysis has great value, you shouldn’t use statistics alone to make your decisions. Statistical analysis can only use past data, and past performance isn’t necessarily an indicator of future performance. We use statistical analysis to create shortlists of funds before looking at these in greater depth with subjective analysis in order to make recommendations.
What level of risk is right for me?
Risk is very much a personal choice, and finding out your attitude to it is more an art than an exact science. You can find out more by reading the managing risk section of this site.