How we picked the winners
The performance awards go to investment companies and trusts whose fund managers achieve the best risk-adjusted returns in their categories in the three years to 31 August. To do this our panel of four judges analysed their growth in net asset value (NAV) and rewarded those funds that had given the most return for each unit of risk.
For investment companies investing in publicly traded equities, or shares, they looked at which scored the highest ‘information ratio’ against a stock market index. Under this measure, which rewards trusts with smoother investment returns over those that have been more lumpy or volatile, any positive reading up to 1 is considered good.
For categories where funds invest in less frequently traded assets, we used two different methods. For Infrastructure and Specialist Debt we ranked trusts on their three-year ‘Sharpe ratio’, which, like the information ratio, highlights good risk-adjusted returns, but does so against cash rather than a stock market benchmark. In Private Equity and our two Property sectors, we simply picked investment companies with the best three-year growth in NAV.
We believe this is the best way to judge the performance of their fund managers rather than simply rewarding investment companies with the best shareholder returns, where prices can swing to discounts and premiums below and above the asset value.
