S&P rates BT and Perpetual best in concentrated equities
Standard & Poor's (S&P) Fund Services has released its ratings of the Australian-equity concentrated peer group, including 13 funds from 12 managers.
BT Investment Management and Perpetual were both assigned a five-star rating, with S&P pointing to the managers’ stock-picking ability and their broad, stable, well-resourced teams as assets.
Two funds were rated for the first time, and the review also featured one upgrade and one downgrade.
S&P said the peer group reflected a variety of investment styles, including value, core/style neutral and growth managers — with the core/style neutral approach being the most common.
“Portfolios in this peer group usually have around 25 stocks, and are therefore less diversified than a typical Australian-equity fund,” said S&P Fund Services analyst, Tom Mills.
“Limits on active stock and sector positions are also less constrained, which gives the portfolio manager the flexibility to hold only the stocks it views most favourably. As such, concentrated funds can be considered to represent a manager's best investment ideas, and are therefore a good reflection of a manager's stock-picking ability,” Mills said.
Concentrated funds tend to exhibit higher tracking error and greater variability of returns in the short term, he said.
“Concentrated funds can offer the opportunity of higher returns, but with less diversification than non-concentrated strategies, and hence higher stock-specific risk,” he said.
Recommended for you
The month of April enjoyed four back-to-back weeks of growth in financial adviser numbers, with this past week seeing a net rise of five.
ASIC has permanently banned a former Perth adviser after he made “materially misleading” statements to induce investors.
The Financial Services and Credit Panel has made a written order to a relevant provider after it gave advice regarding non-concessional contributions.
With the election taking place on Saturday (3 May), Adviser Ratings examines how the two major parties could shape the advice industry in the future.
