FE Trustnet will launch what it has described as "the most extensive rating system of index trackers funds in the retail industry" tomorrow.

The service will rank exchange traded funds and passive funds alongside each other.

It will score around 250 ETF and passive funds to provide its 10,000 adviser users on FE Analytics and 20,000 adviser users on FE Trustnet a clearer idea of the passive funds they are investing in.

The firm said that the difference with other qualitative passive rating services, is that FE Passive Fund Ratings ranks funds "objectively and transparently using a quantitative methodology".

The aim is to help advisers give impartial advice. At launch around 250 passive funds, split into nine broad asset classes, will be rated, with the possibility this will expand.

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Michael Holland, managing director at FE, said: "The funds industry is moving towards a hybrid of using both active and passive funds together and there has been a gap in the availability of quality research on passive funds owing to their complexity. We have responded to this challenge with the FE Passive Fund Ratings.

"What these ratings show is that past tracking ability of a passive fund can be used as a guide to how well that group will track an index in the future. The difference between the best and worst trackers/ETFs is large and makes a significant impact on the value of your investment."

Funds with the lowest tracking difference and error score the most highly, while funds over £100m in assets under management score higher than smaller funds with FE viewing fund size as a reasonable proxy for liquidity.

The number of crowns a fund receives is determined by an absolute score across all the components, with tracking difference ranking highest in terms of importance.

To qualify to be ranked funds must have at least a three year track record and be available for sale in the UK.

FE only rates funds whose benchmarks reflect the main types of investment that a UK investor would be interested in. As a result funds and ETFs that track commodities indices, those that are leveraged or are reverse trackers, as well as Smart Beta products, have all been excluded.