Former Southpac chief executive Rob Walker has developed his own rating system for fund managers (which isn’t based on stars) and attempts to pick out the managers on the rise and those on the wane.
His firm Investment Management Consultants (IMC) researches the retail and wholesale market and produces a quarterly report that attempts to work out "who’s who" in the competitor ranks.
"That is whom IMC believes is succeeding, sitting or falling within each category."
Walker describes the manager standings list as a mix of quantitative and qualitative, with the former coming first.
Rather than attach star ratings to a manager or a product, IMC measures managers against their peers and index performance data.
Walker says the industry is dynamic, therefore managers’ standings will change from quarter to quarter.
"The rating system recognises that very few managers either achieve the pinnacle of success or the rock bottom of failure. The ‘mass’ of managers fall into the rising or falling middle ground.
"For most investors the important information needed before making an investment decision is usually concerned with past consistency and future potential," Walker says.
One of the objectives of the analysis is to test the quality of managed balanced funds against IMC‘s risk-adjusted benchmark portfolios that represent suitable portfolio risk levels for each group.
Walker says only 8 per cent of managed balanced products exceeded the IMC benchmark portfolio returns in his report for the quarter ended December 31.
"IMC’s view is that firstly, there are a limited number of actual investment managers in New Zealand. Secondly only a few of these approach the definition of being close to excellent in the task undertaken."
Walker says the key differences between what IMC is doing and what other research houses do is that IMC doesn’t have any affiliations with fund management companies, nor does it rely on fund managers for revenue.
The IMC standings are done to help the company’s clients make investment decisions.
To view IMC's ratings click here
Former Southpac chief executive Rob Walker has developed his own rating system for fund managers (which isn’t based on stars) and attempts to pick out the managers on the rise and those on the wane.