Australian equities managers fall short

Only 28 per cent of the Australian equity fund managers reviewed by van Eyk have received a recommended rating, the researcher stated.

None of the 65 managers reviewed received van Eyk’s ‘AA’ rating in its Australian Equities core and concentrated reviews, while 12 core strategies and six concentrated strategies received an ‘A’ rating

“We are firmly of the view that Australian equities managers need to more actively engage or hire independent industry experts in order to increase the accuracy of their investment predictions across various sectors, said van Eyk senior investment analyst, Matthew Olsen (pictured).

“Disappointingly, few Australian equities managers currently do this, even though most can certainly afford to given the size of their annual fee intake.”

He added that van Eyk would prefer to see manager fees more actively reinvested into activities that enhanced returns for the underlying investor.

“We see broker research as providing a valuable service to the Australian market, but fund managers need to go well beyond mere reliance on broker research in order to differentiate from their peers. Some managers demonstrated these insights and were rated favourably in the review process.”

Olsen said managers were assessed holistically. Only 28 per cent received an ‘A’ rating because most managers fell short in certain areas. He said on average ‘style neutral’ managers showed a greater propensity to conduct deeper research. He added that while managers had a diverse range of views on the market, there were some sectors where the similarity of view was striking.

“The most common positions as at the review date were that managers were heavily overweight the consumer discretionary sector and heavily underweight both the property and consumer staples sectors,” he said.