Pick of the bunch
While financial planners should be the ultimate judge of the performance of research groups, fund managers are also uniquely positioned to provide some insight into the abilities of the different researchers.
As part of the annual Rating the Raters survey, Money Management asked fund managers to rate the overall abilities of the research group.
According to fund managers, three groups — Lonsec, van Eyk and Mercer — stood out.
The survey found 67 per cent of fund managers thought that overall, Lonsec was excellent or good, while 61 per cent thought van Eyk and Mercer were excellent or good.
Forty-five per cent of fund managers rated Assirt as excellent or good. Morningstar was viewed as the most independent of all research houses, with 46 per cent of fund managers saying its ability to keep ratings free of confict of interest was excellent or good.
Van Eyk managing director Stephen van Eyk says: “Obviously, when you’re looking at the same markets and the same managers, you’re going to have similarities, because there aren’t exactly 50,000 ways you can do it. So partly it stands on the skill of your researchers, and that’s our big differentiation.”
He adds: “Any fund manager will tell you that over a 15-year period, van Eyk researchers are known to be more experienced and more varied in their background.”
In addition to people skills, van Eyk says the processes used are of paramount importance. “It’s the complete analysis. We’ve got the processes to line up more information to make those judgments.”
Morningstar head of consulting Anthony Serhan is equally quick to talk up the value of his firm’s ratings.
“We are very much of the view that understanding what a manager holds today, and the characteristics of those holdings, is going to give you a much better view on the likely performance of that manager going forward than looking at three years of past return numbers.”
He also adds that, because Morningstar is part of a global organisation, the Australian headquarters is able to leverage off development and research being conducted in other markets, and use that information in Australia when appropriate.
Lonsec’s general manager of research Grant Kennaway, while somewhat reluctant to blow his own trumpet, comments: “We don’t try to differentiate ourselves from our competitors, but we have a firm belief that research should be more qualitative than quantitative.”
He also says the firm’s focus on the needs of advisers has enabled it to double its client base over the past 18 months.
“We are focused on trying to deliver solutions for what advisers are telling us they want. Quite frankly, we’ve just kept our
head down and done the work —
effectively a strategy of just spending time with advisers.”
Recommended for you
With wealth management M&A appetite only growing stronger, Business Health has outlined the major considerations for buyers and sellers to prevent unintended misalignment between the parties.
Industry body SIAA has said the falling number of financial advisers in Australia is a key issue impacting the attractiveness and investor participation of both public and private markets.
As advisers risk losing two-thirds of FUA during the $3.5 trillion wealth transfer, two co-founders underscore why fostering trust with the next generation is vital to retaining intergenerational wealth.
As advisers seek greater insights into FSCP determinations, what are the various options considered by the panel and can a decision be appealed?
