The fi360 Fiduciary Score is a quantitative evaluation of how well a fund meets a minimum set of due diligence criteria. The score can quickly help identify a list of Mutual Funds and Exchange Traded Funds that are worth further research in your selection process. You can also use the score as part of your ongoing monitoring process since it can highlight funds with potential deficiencies.
If you are an investment adviser, you need to conduct your diligence on the investment choices you distribute. As we saw in the Hennessee Group administrative action, if you promote your diligence program you have to actually follow that program. [Failure to Conduct Diligence Can Lead to SEC Sanctions]
The fi360 scoring system weights a fund’s standing in relation to thresholds in nine areas. The more points, the worse the fund choice. Zero is good and 100 indicates significant shortfalls. The nine areas for scoring:
- regulatory oversight;
- track record;
- assets in the fund;
- stability of the organization;
- composition consistent with asset class;
- style consistency;
- expense ratio/fees relative to peers;
- risk-adjusted performance relative to peers; and
- performance relative to peers.
Fi360 offers investment fiduciary education, practice management, and support. They also offer training and certification for investment fiduciary professionals.