The process Lonsec implemented to select the winners for each category consisted of three components.
As an initial screen, the funds needed to be rated by Lonsec.
Lonsec’s managed funds research rating process is qualitatively skewed.
Lonsec believes that managing money is a combination of ‘art’ and ‘science’. It does not accept that there is one way to manage money, although it believes there are a number of critical ingredients that combine to produce a quality investment product.
Lonsec’s assessment of people — experience, ‘quality’, team depth, turnover, work environment and structure, key person risk and so on — and investment process has the greatest impact on its rating process.
From this screened universe, Lonsec utilised two equally weighted components to select the winners in each category.
The first component was the one-year excess return for the funds for the calendar year 2008. Since the majority of retail flows are invested in wholesale trusts via platforms, wholesale trusts were used as the vehicles for performance calculation for managers.
The second component was a qualitative analyst ‘momentum’ score, which was determined by Lonsec research analysts for each manager in the category.
Factors that were considered in this momentum score included process enhancements, team stability and depth, as well as risk management. The highest scoring manager from the aggregate of these two components was declared the winner in each category.
Lonsec’s aim was to recognise managers that have performed strongly in their category in 2008 and, equally importantly, are well positioned to deliver superior performance in the future.
For the overall fund manager of the year and the rising star awards, Lonsec utilised a voting process involving senior members of the Lonsec research team.
