Lonsec and Zenith lead title chase

In boxing parlance, part one of Money Management's Rate the Raters survey has delivered a split decision, with Lonsec and Zenith Investment Partners slogging it out for the title, ahead of their rivals.

Having secured top spot after the Dealer Group survey in 2014, Zenith has found itself tied with Lonsec in the minds of fund managers for the second year running.

Scored over six rounds, well, categories, the pay-to-be-rated houses towered over their subscription model rivals, topping three categories each.


While the 2015 survey has delivered a similarly close result to the findings of last year's survey, the landscape of the research market has changed significantly, with van Eyk Research being knocked out.

The fall-out from the collapse and subsequent closure of van Eyk, saw Lonsec swoop for the research house's iRate research and construction tool.

By November, research house, SQM, had announced its intention to fill the void created by van Eyk's departure from the space, recruiting former van Eyk deputy chief investments officer and head of research, Robert da Silva, as head of research, fixed income in alternatives for the growing research company.

At the time, SQM managing director, Louis Christopher said the company believed a gap had opened up with the "unfortunate demise of van Eyk".

"With this, our goal is to be the most recognised and respected specialist investment research house in Australia," he said.

Despite Lonsec's parent company, Lonsec Fiscal Holdings announcing it was reviewing the research house's future strategy, the research house remained the most used by fund managers, with 100 per cent of respondents reporting their funds had been rated by Lonsec in the past 12 months.

Small players

While SQM remains a small player in the overall research market, respondents who reported having funds rated by the company ranked its performance as "good" to "excellent" across the main categories.

Property Investment Research (PIR) was a second outlier mentioned by fund managers in this year's Rate the Raters, with respondents describing the firm's research methodology, staff, feedback and ratings as "excellent". However, it received an "average" rating for its turnaround time.


Despite Lonsec's parent company, Lonsec Fiscal Holdings announcing it was reviewing the research house's future strategy, the research house remained the most used by fund managers, with 100 per cent of respondents reporting their funds had been rated by Lonsec in the past 12 months.

Morningstar and Zenith were tied as the next most used research houses, with 94 per cent of respondents having funds rated by them, while Mercer provided research for just over half of respondents.


Having fallen behind Zenith in the eyes of fund managers last year, when it came to the methodology of its research, Lonsec returned to the top of the table in this category this year, with 43.75 per cent describing it as "excellent" and the same proportion of respondents ranking it as "good".

Mercer also shone in this category, with a third of those rated by Mercer describing its research methodology as such - a significant turnaround from the 2014 survey, when Mercer failed to get a single excellent rating for its methodology.


Zenith recorded it sole "below average" rating across the survey, with 6.666 per cent of those rated by the firm describing its methodology as such.

While Morningstar received the same proportion of "excellent" ratings this year as in the 2014 survey, the company saw its "good" methodology rating slip from 66.666 per cent last year to 26.666 per cent, with 40 per cent of respondents describing it as "below average" or "poor".

Rating satisfaction

When it came to reviewing the ratings given out by the research houses, Zenith topped the pile, with more than 93 per cent of those rated by the company reporting the rating was "excellent" or "good", up from just under 20 per cent in 2014.

Lonsec also performed strongly in this category, with 81.25 per cent of respondents similarly satisfied with the rating provided by the ratings house.


Once again Morningstar maintains its "excellent" rating from 2014 at 13.333 per cent, while a further 40 per cent said the ratings they were provided were "good".

Meanwhile, Mercer saw its "good" to "excellent" score jump to two-thirds of respondents from just 16.7 per cent in 2014.

Turnaround time

Again Zenith produced the strongest performance in the eyes of fund managers for their turnaround time of research, with one in five describing it as "excellent" and a further 73 per cent reporting it was "good".

However, the turnaround times provided by other research houses were less positive, with a quarter of respondents describing Lonsec's performance as "below average" or "poor", with Morningstar receiving a similar rating.


More than half of those rated by Mercer said the research house's turnaround time was "below average" or "poor".

However it was not all doom and gloom for Lonsec, with just over 60 per cent of respondents rating its turnaround time as "good" to "excellent".


When it came to the transparency of the ratings process, Lonsec pipped Zenith to the top spot, with 50 per cent of respondents saying it was "excellent", and a further one in four saying it was "good".

For Zenith it was almost the opposite, with just over half the fund managers rated by the 2014 Ratings House of the Year, saying the transparency of its process was "good", while 26.66 per cent said it was "excellent".


Morningstar claimed the third spot when it came to transparency with 53.333 per cent of respondents saying it was "excellent" or "good", with a third reporting the same for Mercer.


Zenith's staff were critical to its success in 2014, and again they were among the most respected in the industry, with almost half of those rated by the company describing them as "excellent", and a further 40 per cent rating them as "good".

The quality and experience of staff at Lonsec and Mercer were also highly regarded, with close to a third of respondents rating both firms' staff as "excellent", while half of those rated by Lonsec said their staff were "good", and 44.444 per cent of those assessed by Mercer gave their personnel the same score.


Morningstar's staff had the lowest rating, with just 53.333 per cent of respondents saying they were "excellent" or "good", with one in five describing them as "poor".


When it comes to providing feedback, fund managers believed Lonsec have been top of the pile, with 43.75 per cent rating the research house's feedback as "excellent".

Fund managers also rated the feedback they received from Zenith highly, with a third of respondents rated by the research house saying it was "excellent".


While those rated by Lonsec and Zenith were largely positive about the feedback they received, less than half of those rated by Mercer and Morningstar rated their feedback as "good" to "excellent".

A third of those rated by Morningstar described the feedback they received as "below average" or "poor", while 22.222 per cent of those rated by Mercer felt similarly.

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