The German Quality and Finance Institute has named Etica Funds a Top Fund Manager in 2021 for the fifth year running. This is the first year that Etica Funds was judged in the Italy Medium category because, in 2020, Etica reached €5 billion in assets under management. The company has therefore joined the ranks of “significant managers” according to the definition in the Bank of Italy’s Regulation[1].
With five awards in five consecutive years, Etica Funds is proof that investing sustainably and responsibly creates opportunities for medium/long-term returns.
Etica Funds wins the Top Fund Manager 2021 award – Italy Medium
In 2021, Etica Funds was named a “Top Fund Manager” in the Italy Medium category in a survey released by the German Quality and Finance Institute, an independent entity specialised in market research and financial product benchmarking in Europe[2].
All fund managers with AUM of €5 to €50 billion were analysed to pick the winners.
Methodology
To find the Top Fund Managers of 2021, the institute considered all funds distributed in Italy (retail classes only) with at least five years of history and AUM of at least €7.5 million, surveying only one class per fund (the oldest). Based on Morningstar data, the analysis compared open-ended funds in ten categories: Italian Equity, European Equity, Emerging Markets Equity, Global Equity, Prudent Balanced, Aggressive Balanced, Flexible Balanced, Alternative, Government Bonds (Europe), Corporate Bonds (Europe).
Performance and risk dictate who wins
Performance and risk control over the past five years were analysed to name the Top Fund Manager for 2021. The methodology is based on two criteria:
- historical performance over the past five years (observation period: 01/01/2016 – 31/12/2020)
- risk for investors (expressed as the maximum drawdown).
Therefore, within each category analysed, the funds were classified according to their average annual performance (“return ranking“) and their maximum observed loss (“max drawdown ranking“). The final score (the weighted average of the two rankings) was determined by weighing these two scores (return: 66%; max drawdown: 33%).
Performance was therefore given more weight than volatility. High average annual returns and low losses will place a fund above the market average, while low returns and a high maximum drawdown will push a fund down in the ranking.
The Top Fund Manager 2021 ranking for funds distributed in Italy
To rank the winners, all the funds of a company were scored based on their position in each of the 10 categories considered. Each fund category ranking was divided into four groups/quartiles.
- Each quartile consisted of 25% of all the funds in that category and the first quartile held the best products with the highest scores.
- The second quartile was for funds with scores above the market average, which were positive but lower than the funds in the first quartile.
- The third and fourth quartiles contained funds whose average annual returns and maximum drawdown put them below the market average. A fund ranked in the third or fourth quartile was penalised with a corresponding negative score.
All the points earned by the managers in the 10 categories considered were then summed to prepare the final ranking of the top fund managers. This was how the overall ranking was calculated.
For more information on the methodology, visit: www.istituto-qualita.com/fondi-2021/.
[1] Bank of Italy Regulation for the implementation of articles 4-undecies and 6.1.b) and c-bis) of the Consolidated Finance Act
[2] The survey by the German Quality and Finance Institute covers an observation period from 1 January 2016 to 31 December 2020.
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