Zenith Investment Partners and Standard & Poor's Fund Services (S&P) are about to launch exchange-traded funds (ETF) research, and expect to follow up with separately managed account (SMA) research shortly thereafter.
Zenith expects to launch its ETF research next week. Zenith analyst James Tsinidis is currently reviewing the Russell High Dividend Australian Shares ETF, which will be the first to receive a rating.
"There are increasingly new players coming into the ETF space - it is not just the big players," Zenith director and co-founder David Wright said.
"Investors look at ETFs pretty simplistically - they don't look at how they are priced," Wright said. "You have to be careful."
The company announced yesterday the appointment of two new investment analysts, Angela Burmeister and Sam Fields, bringing its total staff to 16.
"They will not be covering ETFs, but it will free up resources for ETF research," Wright said.
Zenith will also launch research into managed account portfolios. "We will have some more developments on that front in the next few weeks," Wright said.
S&P will launch its ETF research in October.
"We are ready to launch our ETF research, but we will wait until we have the first rating," S&P Fund Services managing director Mark Hoven said.
S&P launched SMA research last year, but Hoven said the interest in ratings of model portfolios has increased in the last 18 months and the firm now has ratings on 16 portfolios.
"We have seen an explosion in model portfolio providers," Hoven said. "Partly, this was driven by investors' desire to hold investments directly."
Besides rating model portfolios, S&P is also looking to rate the underlying platforms on which the SMA investments are held.
"We are on the cusp of signing up the first platform providers," Hoven said.
He said the interest in having platforms rated stems from the heightened focus on risk management in the industry.
"In the end, there is a counterparty risk there," he said.
Morningstar Australasia launched qualitative ETF research earlier this month. It also provides star ratings on SMA portfolios.
Lonsec has been conducting limited research on ETFs for its clients for over three years, and has ratings on several Vanguard, iShares and Russell products.
