Van Eyk Research was never supposed to be a research company. It was meant to be a master fund.
Back in 1989, a friend of Stephen van Eyk, James Purvis, asked him if he wanted to help him start up a fund.
The fund was supposed to be backed by the bank Whitlam Turnbull, which had strong connections to the Labor Party.
The idea was that the alliance could be used to persuade the union funds to put some super into the trust. But just after the venture started up, things went wrong.
“Whitlam busted up with Turnbull and the money never arrived,” van Eyk says. “I thought I’d better put some research out monthly to try and get some revenue.”
Today, that monthly report is still the flagship of the company, which is now the market leader in research delivery.
Complete independence and a proven history in delivering quality research services have been the key drivers of this success, van Eyk says.
Unlike most research houses, the group does not charge fund managers to be rated and is not owned by a bank or insurance company.
Van Eyk says the research house relies on adviser subscriptions to its research offering, iRate, which can be accessed through the company’s web site. As a result, its products are more expensive.
“We probably are the most expensive research house that advisers can buy because we’re not getting [revenue] the other way, we have to charge for it or we’re out of business.”
Van Eyk agrees that charging fees could compromise ratings, a concern raised by the vast majority of fund managers in Money Management’s Rating the Raters survey. But he doesn’t blame other research houses for charging managers, which might need this revenue to stay alive, .
“I’m not trying to knock anybody else by not charging for ratings. I’m sure that in most cases our counterparts in the industry are not biased.
“It’s just that we want to concentrate on growth strategies for the business and diversifying the business, and I guess not charging for ratings forces us to do it.”
Licensing fees vary from $6,000 per year for iRate Gold to $10,500 for iRate Professional. For an extra $1,200, a share module can be added to either package.
The firm recommends iRate Gold to advisers because it lets them construct model portfolios of investment managers and gives access to product profiles, summary manager reports and ratings. iRate Professional is better suited to dealership investment committees, to monitor and control approved product lists by drawing on more detailed manager reports and ratings.
Aside from concerns expressed about impartiality, another criticism raised in the survey was that van Eyk, along with Assirt and Morningstar, were too slow in meeting review delivery targets.
Rather than dismissing these criticisms, van Eyke has taken them on board. As a result of concerns raised by fund managers in Rating the Raters, the research house has recruited three new staff and upgraded its offering to improve speed and efficiency.
Van Eyk says the company has spent a lot of money in the last eight months to ensure internal processes are more efficient, giving internal analysts faster access to information.
“Now we’ve put in an internal system that literally pulls quant-based stuff out of the system on each manager, like stock balance sheet ratios and profit/ loss ratios on a quarterly basis, and actually presents it to the analyst that has to do that manager,” he cites as an example.
The only area where its integrity could come into question is that it could use its rating tools to boost its recently developed fund-of-funds, Blueprint.
Van Eyk doesn’t see anything wrong with promoting Blueprint.
“We’re not saying to other people you must do this. It’s just an extra service and it’s using exactly the same fund managers as we’re using on the other side, so I can’t see any difference, really.”
