The Portfolio Management Rating of an ETF or a fund is based on the aggregated stock ratings of the securities it holds as well as its overall Asset Allocation rating, which is defined here. The Portoflio Management Ratings and the Total Annual Costs ratings combine to determine our Predictive Fund Ratings.
New Constructs’ stock ratings are regularly featured as among the best by Barron’s over the past three years.
Figure 1 displays the criteria and thresholds that go into the Portfolio Management Rating of every ETF, mutual fund or portfolio we cover. Note that the Portfolio Management Rating is the same as a stock rating except that it incorporates our rating on the fund’s Asset Allocation.
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7 replies to "Portfolio Management Rating: Methodology for Predictive Fund Ratings"
David, if your going to write something, then present it so those whom read whatever site-Ex Marketwatch, may receive your message clear and to the point-Ex industry Utilities, then stocks specific, even if it puts you subject to rebuttal. Keep up the good work!
Mr. Soutier:
I am not sure I understand your point – are you looking for more explanation of methodology in my Best & Worst Funds articles?
[…] its holdings than its costs. Figure 2 shows the ETFs within each style with the worst holdings or portfolio management ratings. The styles are listed in descending order by overall rating as detailed in my 4Q Style Rankings […]
I find your blog very compelling. Theoretically, using your methods could a large retirement Fund such as a state teachers retirement fund also be rated on its holdings, active management, etc.?
Thank you
Carol
Ms. Martin,
Yes. We perform portfolio reviews for many of our clients.
Our analysis can be applied to any group of stocks.
Have you done any backtesting to see how this methodology has translated into excess returns or alpha? Apologies in advance if I missed this somewhere else on the site. Thanks.
We have not been able to do a full backtest of our methodology for all the stocks under our coverage, but you can see the long-term outperformance of our model portfolios here.