Lonsec’s annual diversified sector review has resulted in the assignment of only one highly recommended rating to BlackRock, and downgrades to the Aberdeen/Credit Suisse and UBS funds.
Lonsec assigned two funds with an investment grade rating, being Australian Unity and Colonial First State. It also assigned a recommended rating to eight funds – BT, GSJBWere, ING, Maple-Brown Abbott, Perpetual, UBS, Vanguard and Zurich.
However, post review the UBS fund has been placed on fund watch following the departure of portfolio manager Michael Karagianis and the subsequent transfer of the management of the fund to an offshore investment team.
Lonsec’s review also assigned a fund watch rating to the Aberdeen/Credit Suisse fund as a result of the acquisition.
Lonsec senior investment analyst managed funds Deanne Fuller said the review found fund managers have marginally increased resources in this sector over the past year, with the average investment team increasing to seven people. This is up from an average of six in 2008.
In most cases the size of the investment team represents the number of individuals having input into the strategic asset allocation process, Fuller said.
“Lonsec prefers managers that dedicate resources solely to the management of diversified funds rather than those holding dual responsibilities,” she said.
Alpha diversification has also become a key trend for these fund managers in 2009, according to Fuller.
“Several managers now implement Australian equity exposure via a number of internal capabilities such as growth, value, core or long/short to reduce the impact of one poor performing capability on the overall portfolio performance,” she said.
“Lonsec sees this as a positive development for the sector.”
