Morningstar offers SRRIs for Ucits funds

Magnifying_graphInvestment research house Morningstar has unveiled its calculation of the synthetic risk reward indicator (SRRI), a measurement that all Ucits funds are required to provide as part of the Ucits IV regulations.

The rules state that investment firms must include an SRRI score in their key investor information documents (Kiids), which became obligatory on 1 July, with firms granted a year to comply.

Morningstar hopes its SRRI will gain traction in the industry because it is independent and promises to be consistent. The question of comparable SRRI reporting may well become a live issue because the European Securities and Markets Authority (ESMA), the body which sets the rules, has left considerable room for interpretation in how funds are categorised into ESMA fund types and how performance is “back-filled” for funds less than five years old.

Andy Pettit, director of pan-European data and research strategy for Morningstar, said: “These variables are likely to cause inconsistency in SRRI calculations across the industry, despite the best intentions of the SRRI to be a meaningful figure that is universally comparable.”

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