ObjectivesThe FE Adviser Fund index, or set of indices, are designed to act as indicators of the UK funds market. The FE AFI provides a benchmark against which the investment community can compare fund portfolio performance, as well as offering a relevant flagship index for the funds market.
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The Indices
There are three themed indices that currently form the FE AFI.
FE Adviser Fund Index Aggressive
FE Adviser Fund Index Balanced
FE Adviser Fund Index Cautious
The Constituents
There are three portfolios of funds, one for each index.We have formed the FE AFI Panel, a representative group of the UK's leading financial advice firms. Each firm selects a portfolio of funds for each themed index, according to the skills and expertise of their organisation.
The portfolios that the Panelists submit must have a maximum of 10 holdings, which are weighted by the Panellist. FE aggregates each Panelist's portfolios to obtain an overall list of constituents and weightings.
Allowing for similar selections by different Panelists, each index would have between 50-100 constituents.
Criteria for the Selection of Fund Portfolios
For the FE AFI Aggressive, Balanced and Cautious indices, funds must be derived from the 'UK Authorised Unit Trusts and OEICs' universe.The Panelists must assume that the 'client' is saving for a pension at 65. For example:
FE AFI Cautious portfolio - Panelists would choose funds suitable for a person in their late 50s
FE AFI Balanced portfolio - Panelists would choose funds suitable for a person in their mid 40s
FE AFI Aggressive portfolio - Panelists would choose funds suitable for a person in their late 20s
Panelists are also required to weight their fund selections accordingly.
Mechanics
The FE AFI set of indices is calculated daily. Composition of the portfolios are reviewed and rebalanced semi-annually.All values are calculated on a total net return, bid / bid, mid / mid basis.Each index starts at 100.