Is there a room for another research house?
Although fund managers have been divided in their opinion on whether there is a room in the market for one more research house rating their products, they feel there is definitely an opportunity for better coverage of non-mainstream funds and some room for alternative investment specialist ratings.
Additionally, managers surveyed by Money Management said they would expect ‘out of the box’ concepts around investments.
Money Management’s survey found that 44% of surveyed fund managers were of opinion that there was room in the market for one new player in the research and ratings space while a similar number of managers declared that their spend on research firms was not going to change over the coming year.
According to managers, increased competition could help improve pricing and provide an increased willingness to consider emerging managers.
The diversity of players who would potentially provide more detailed reports would not only add to the breadth of coverage, but would keep the already established players on their toes, one manager said.
More competition would also mean that ratings houses would become more thorough, with the more transparent processes and improved price competitiveness.
Apart from a growing need for the wider coverage of managed accounts and environmental, social, governance (ESG) space, the higher number of research houses would also help avoid concentration risk in research partners, according to managers.
On top of this, managers said they expected a better coverage of the mortgage sector and an innovative dedicated specialist researcher would need to demonstrate a greater focus on a research and high level analysis. It should also provide a simplified ratings scale and output more focused on applications for the funds and funds’ opportunity.
Lat week Money Management revealed its 2021 Rate the Raters survey which gauged fund managers’ sentiment towards the key research houses.
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