RPAG Scorecard vs fi360 Fiduciary Score

Investment fiduciaries are responsible for selecting and monitoring funds to satisfy the requirements of ERISA Section 404(a). Two of the more widely used tools that do this are the RPAG Score (Scorecard) and fi360 Fiduciary Score. Both supply fiduciaries with investment policy and process, however, both do so using different approaches. There are unique differences and considerations a fiduciary must consider when selecting the most appropriate one.

Investment Policy Statement: Standardization vs. Customization

The RPAG Scorecard System employs a standardized approach, streamlining the due diligence process with a uniform set of criteria that triggers “watch list” or immediate “review” status. fi360 allows for customization to accommodate any need or desire of the plan fiduciary or advisor. Both establish a process. However, fi360 provides greater flexibility for the fiduciary if they want to elect which of the fi360 criteria are used as a part of the selection and monitoring criteria.  

Benchmark vs. Peer Group-Based Analysis

A meaningful difference between the methodologies is the utilization of benchmarks and peer groups. RPAG’s Score predominately uses benchmarks when evaluating managers. fi360 predominately uses peer group analysis (rankings) in its manager evaluation. Benchmark analysis compares funds vs. representative indices like the S&P 500 Index, which is set to denote the “market” in a certain asset class. Peer group analysis ranks funds in order of best to worst based on the criteria being measured.

RPAG’s Scorecard System could theoretically have no acceptable funds due to no funds outperforming the “market” benchmark or index for that category. In contrast, fi360 will always have high ranked funds since they rank funds from the “best” (1st percentile) to “worst” (100th percentile). This is a key differentiator between the two methodologies.

Time Period Analysis: Length and Methodology

RPAG places a heavier emphasis on long-term time periods. A 5-year time history is required to be scored on the RPAG system (index funds only need three years of time history). This requirement excludes many fund managers from receiving an RPAG Score. The fi360 Score requires three years of history, resulting in more funds scoring in their system. 

The RPAG Score requires five years (60 months) for actively managed funds (including asset allocation) in the effort to identify manager skill. Because of its statistical approach, it not only requires more data points for its portfolio analytics, but also incorporates a complete market cycle to the extent possible over a five year window. Because fi360 predominately incorporates peer group analysis in its Score, the approach is akin to a rank in terms of how well a certain fund did over a certain time period. This rank may differ between funds in similar categories if one only has three years of data vs. another that may have 10. Both will receive an fi360 Score but will reflect different periods. 

Supporting Analysis: Factor Transparency and Level of Detail

The RPAG Score is generated from a host of portfolio analytics that can be shown in a comprehensive Asset Class Report. This offers fiduciaries further insight into the RPAG Score, including why a fund passes or fails specific criteria. In contrast, fi360 does not focus on the calculations for its peer group factors. Instead, it simply shows the specific rankings for each factor over multiple time periods. While helpful, it may not be enough for fiduciaries who want to deep dive into the portfolio analytics that support the Score.

Manager “Skill” vs. Manager “Rank”

The differences between the two revolve around what each are trying to accomplish. While the RPAG Score was designed to be more forward looking with the attempt to identify manager skill, the fi360 Score uses a “grade” or “rank” based approached to show how managers have performed. The four areas highlighted represent the key differences between RPAG and fi360. Methodology and time period comprise two of the most meaningful differences. The RPAG Score employs a standardized approach as it relates to process, favoring its own evaluation and weighting of the criteria. While the flexibility of fi360 may at surface seem attractive, it can lead to inconsistencies if not thoroughly applied. To the extent the objective is to identify manager skill as opposed to a historical “grade” or ranking, the RPAG Score is the best methodology suited for that important fiduciary task.

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