Lonsec lifts hold on CFS property fund

By Zoe Fielding

LONSEC is the first researcher to reinstate an ‘investment grade’ rating for Colonial First State’s(CFS) Australian property funds following the recruitment of two more property analysts from UBS, although the manager’s international property funds remain on ‘fund watch’.

Morningstar has also kept its ‘avoid’ rating on the global offering, while Standard and Poor’s has maintained its ‘on hold’ rating for the domestic and global funds.

Lonsec’s positive reinstatement follows its meeting with CFS head of property John Snowden, who joined from UBS in February after the former CFS team departed en masse to Perennial.

“The reason why we reinstated the ‘investment grade’ rating is that we’re comfortable that John’s settled into his new role. He has announced two new appointments from UBS, so we are comfortable for new investors to go into the fund,” Lonsec general manager of research Grant Kennaway said.

Last week, former UBS property researchers Andrew Nicholas and Miranda Moran were recruited to join CFS, with Nicholas to fill the role of senior portfolio manager and Moran to take a position as a property investment analyst.

Two vacancies remain in the CFS property team.

Standard & Poor’s associate director of fund ratings Peter Ward said the researcher was in close contact with CFS but considered it too early to re-rate the funds, as Nicholas and Moran do not actually start with the team until mid-April.

Morningstar head of research Justin Walsh said Morningstar would not remove the ‘avoid’ rating until current discussions with the CFS team had been completed and it could be confident that the new CFS team was able to successfully operate the fund.

“[The two new appointments] will help, but it doesn’t solve the puzzle just yet. There were five in the original team and now there’s still just three, and the previous five were all handpicked by Stephen Hayes,” Walsh said.