New Rating

Premier Pan European Property Share - New rating

Suspended

Edinburgh Worldwide - Rating suspended

New launch

F&C Global Real Estate Securities

New Rating

Henderson Asia Pacific Capital Growth - New rating

New Rating

Artemis European Opportunities - New rating

New Rating

Standard Life UK Equity Income Unconstrained - New rating

Rating downgraded

M&G Recovery - Downgraded

New Rating

Franklin UK Smaller Companies - New rating

New Rating

Investec UK Alpha - New rating

Rating upgraded

Jupiter Absolute Return - Rating upgraded

New Rating

Invesco PowerShares FTSE RAFI US 1000 - New rating

Rating downgraded

Invesco Perpetual Income and High Income - Downgraded

New Rating

Battle Against Cancer Investment Trust - New rating

New Rating

Foresight Solar Fund - New rating

New launch

Lindsell train global equity

New Rating

Aviva Investors US Equity Income Fund 2 - New rating

Rating downgraded

Aviva Investors US Equity Income - Downgraded

Rating downgraded

RENN Universal Growth - Downgraded

New launch

Fidelity global enhanced income

Rating downgraded

iShares S&P 500 ETF (Inc) - Downgraded

New Rating

Vanguard S&P 500 ETF - New rating

Suspended

Martin Currie North America - Rating suspended

Suspended

iShares S&P 500 ETF (Inc) - Rating suspended

New launch

Invesco perpetual global targeted returns

New Rating

Lazard Emerging Markets - New rating

New Rating

Old Mutual UK Alpha - New rating

New Rating

Cazenove UK Equity Income - New rating

Rating downgraded

Old Mutual UK Dynamic Equity - Downgraded

Rating downgraded

Franklin Mid Cap Fund - Downgraded

New Rating

AXA Framlington UK Mid Cap - New rating

New Rating

The Renewables Infrastructure Group (TRIG) - New rating

New Rating

BlackRock Frontiers Investment Trust - New rating

New Rating

Bluefield Solar Income - New rating

New Rating

GAM Star GAMCO US Equity - New rating

Rating upgraded

AXA US Short Duration High Yield - Rating upgraded

Rating downgraded

Jupiter Absolute Return - Downgraded

New Rating

Polar Capital Global Financials Trust - New rating

Suspended

Cazenove European - Rating suspended

New launch

Jupiter Global Equity Income

New Rating

Henderson European Focus - New rating

New Rating

Baring Europe Select - New rating

Rating downgraded

Neptune European Opportunities - Downgraded

Rating downgraded

JPM European Smaller Companies - Downgraded

New Rating

Morant Wright Nippon Yield - New rating

Rating downgraded

Blackrock UK Income - Downgraded

Rating downgraded

Fidelity UK Smaller Companies - Downgraded

Suspended

BlackRock UK Dynamic and UK Absolute Alpha - Rating suspended

New Rating

Greencoat UK Wind Investment Trust - New rating

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Schroder UK Alpha Plus and Schroder UK Growth IT - Rating suspended

New launch

TwentyFour Income fund

New Rating

Doric Nimrod Air Two - New rating

Rating downgraded

Aberdeen Emerging Markets - Rating downgraded

New Rating

Henderson Asian Growth Investment Trust - New rating

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Newton Higher Income - New rating

New Rating

Blackrock UK Income - New rating

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Threadneedle European Smaller Companies - New rating

New launch

JO Hambro CM Global Opportunities

New Rating

Invesco PowerShares FTSE RAFI US 1000 - New rating

We have today awarded the Invesco PowerShares FTSE RAFI US 1000 ETF three stars. This is an exchange traded fund that tracks an index of US equities that ranks companies by the size of their underlying business rather than the value of their equity. As a result, we consider this to be an ‘alternative beta’ index which tends to have a style bias favouring ‘value’ stocks over ‘growth’ stocks.

Traditional indices - such as the S&P 500 - weight constituents based simply on the total value of their shares in issue. This means they have a natural ‘growth’ bias since these indices increase their exposure to a stock as the share price rises. One potential drawback of this is that such indices can have very high exposure to stocks that have become expensive and can be susceptible to falling heavily during a market correction. At the same time, they will have less exposure to those same stocks when they are cheaper so will participate less in any subsequent recovery.

By contrast, the FTSE RAFI US 1000 index ranks companies based on four fundamental factors – sales, cashflow, dividend and net asset value – taking no account of the price. As a result, the index is considerably less susceptible to mis-pricing errors. Additionally, by looking at four different factors this index avoids being excessively skewed to one particular sector that may dominate a given factor. For example, a high volume, low margin business such as a wholesaler would rank highly on the ‘sales’ factor but would be expected to be lower on the ‘cashflow’ measure.

The methodology of this index is sound, and there is a well-reasoned philosophy behind it which has produced consistently attractive returns for investors over the long term, outperforming traditional indices such as the S&P 500 which are susceptible to mis-pricing errors. Costs are slightly higher for this ETF than those following more popular indices, but remain considerably cheaper than most active managers and this added cost comes with the ability to outperform the traditional S&P 500 benchmark.

We estimate ‘internal costs’ at approximately 0.36% (compared to the reported TER of 0.39%). At the same time we estimate the bid-offer spread as around 0.3%. Trading in this ETF is considerably lighter than the more popular S&P 500 ETFs, but investors should be aware that there is an effective ‘throughput’ liquidity mechanism from the US equity exchanges which should ensure adequate liquidity for most investors.

This ETF is rated three stars and is added to our Premier Selection of rated funds. Investors may wish to consider this as a complement to or substitute for passive exposure to US equities through an S&P 500 tracker.

Exchange traded investments track the performance of a financial index and as such their value can go down as well as up, much like shares, and you can get back less than you originally invested. Some ETFs are more complex so you should ensure your read the documentation provided to ensure you fully understand the risks.

Different funds carry varying levels of risk depending on the geographical region and industry sector in which they invest. You should make yourself aware of these specific risks prior to investing. Any yields quoted cannot be considered reliable indicators of future income.

This article is not a personal recommendation or advice to invest.