Research houses have told dealer groups and financial advisers to keep a close eye on the health of their fund managers amid the current economic turmoil.
Zenith has a renewed focus on survival and will boost its research reports by adding a separate operational overview section.
The research house had already identified a few problem firms whose sustainability had come under the spotlight due to plummeting funds under management (FUM) caused by 2008’s bear market and compounded further by investor redemptions, Zenith Investment Partners director David Wright said.
In particular, several boutiques that have not had a chance to develop a strong track record or FUM are feeling the strain.
Some large institutionally-owned fund managers and hedge funds were also struggling, Wright said.
“Not everybody is going to survive going forward. We expect further consolidation of fund managers through merger and acquisition activity. I expect to see more Credit Suisse and Aberdeen-type transactions,” he said.
Lonsec general manager of research Grant Kennaway said while the research house was not adding a specific operational overview section to its reports, it was ascertaining critical financial information from underlying parent companies of funds.
“We’re spending a lot of time at the moment collecting and analysing corporate questionnaires, particularly from boutiques. The main concerns are in the boutique space at the moment,” he said.
There were managers Lonsec had chosen not to rate due to their financial health, Kennaway said.
Standard & Poor’s (S&P) had also sought extra financial information from fund managers from December to February through business sustainability questionnaires, S&P head of research Leanne Milton said.
The research house had identified managers that warranted closer monitoring over the coming year, she said.
