JBWere culture limits Morningstar rating

Morningstarhas released a review ofJBWere’sbusiness and management strengths, and has rated the company with a three out of five, but says it could have been a stronger rating if the manager had provided more information to the research house.

Morningstar notes that the company is trying to redefine itself as a fund manager, beyond its legacy as a stockbroking firm. This, says Morningstar, is the main challenge ahead for JBWere.

However, Morningstar head of research Daisy Chee says JBWere has a very “private” culture. Much of the documentation Morningstar sought from the fund manager was not made readily available, which she says limited Morningstar’s capability to assess its business strengths.

The lack of information available to Morningstar contributed to various business strengths rated as average or weak, Chee says. While most outlooks for JBWere’s different strengths were moving in the right direction in Morningstar’s eyes, the current status of each were average at best, with a few areas described as weak.

It’s stability and profitability was assessed as weak by the research house, although the company was praised for trying to transform itself beyond its stockbroking legacy, utilising its alliance with US-based international share manager, Wellington. However, being of “the smaller end of the market” in terms of funds under management and not making projected targeted returns of 20 per cent in 2000-01 appears to have led to the weak assessment.

Chee also confirmed that the research house would have liked to have seen more documentation relevant to this area, which partly contributed to the ‘weak’ rating.

Three other areas the fund manager was judged to be weak in by Morningstar were strategic planning, infrastructure resources and its compliance regime. The first of these was impacted by JBWere not providing the research house with formal documented business plans, but Morningstar noted that the company is endeavouring to leverage off its stockbroking arm for fund inflows.

Its infrastructure was said to be weak because Morningstar believes it lags behind the rest of the industry with its IT systems, while preventative trading compliance systems have not been implemented at the fund manager, weakening its overall compliance strength. However, Morningstar notes that JBWere is in the process of upgrading its compliance program with the establishment early this year of a dedicated team in this area.

Its staff and leadership was graded as average, and said to be stable with strong continuity, although JBWere appeared to lose points from having responsibilities stretched amongst staff managers. Examples that Morningstar provides are Suzanne Branton being head of both institutional business and asset allocation for multi-sector products; and chief executive Michael Clarke doubling up as chief investment officer.