HunterHall Investment Managementhas been given a damning report card byMorningstarin the research house’s sector strength rating of the boutique manager.
Focusing primarily on Hunter Hall’s Australian Value Trust, Morningstar has given it an overall rating of just two out of five.
Morningstar described Hunter Hall’s portfolio construction and execution, risk management, compliance and review process all as “weak”.
The poor rating came despite strong performance for the Australian Value Trust, which for the one year to November 2002 outperformed the S&P/ASX 300 index by 29 per cent.
A key consideration according to Morningstar was the nature of the group’s “deep value” investment approach, which could be risky and has resulted in the downfall of several investment managers in the past.
The research house claims that Hunter Hall’s risk management process is poor, with few stock and sector guidelines in place and exposure to only three market sectors.
Morningstar also identified a key person risk in Hunter Hall’s chairman Peter Hall, who takes a hands on role in the investment process.
The research house also suggested that team resources were relatively stretched, given the group’s global investment focus through its flagship Value Growth Trust.
