Role of investment ratings misunderstood
Specialist property ratings house PIR has told the Australian Securities and Investments Commission (ASIC) that the role of investment ratings is often significantly misunderstood by both investors and advisers.
In a submission responding to an ASIC consultation paper, PIR said that the issue of reports that were intended for general advice only being utilised as a specific investment recommendation to an individual was still an issue that needed further education.
“An investment product, no matter how high a rating it receives, may not necessarily be suitable for any particular client and ratings should not be seen as a proxy for true decision making,” the submission said.
It said that property, as a specialist asset class, required the presence of analysts with specialist property experience to determine the property-specific risks impacting investments.
“Many investors and their advisers do not have the time or requisite experience to be able to accurately determine the nature of such risks,” the submission said. “There are a wide range of schemes on offer, offering a wide range of returns.”
It said that the presence of specialist independent research would help investors and their advisers differentiate between low risk funds and high-risk funds and the relative merits of each.
AUTHOR
Mike Taylor
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