Fund managers give recognition to smaller research houses

Relative newcomer, SQM Research has gained significant ground in Money Management’s latest Rate the Raters research.

The survey, which aims to measure sentiment among fund managers and how they feel about the research houses’ ratings given out to their products, found this year that one of the most important features were: the consistency of the raters’ research methodology, the experienced staff and constructive feedback that would help managers move their ratings forward in the future.

SQM Research, which managed to earn one of the highest ratings this year across three categories out of six, was praised by fund managers for its ability to structure comprehensive reports and “ask the right questions”.

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The survey also found that some of the big houses continued to struggle with high turnover followed by replacements by junior representatives with less to none practical experience.

At the same time, in order to improve their services, according to fund managers, the research houses should stay focused on the Australian market and its requirements rather than transplanting models they use in overseas markets.

The feedback from fund managers also showed a growing significance of ratings in a new and more fragmented environment, given the post-Royal Commission environment and general changes in the financial services industry.

Similar to the previous years, the raters were rated across six main categories which included the research methodology, rating satisfaction, transparency of the rating process, the quality of their personnel, the ability to provide an informative feedback as well as the accuracy of peer groups.

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