The breakdownlast week of the proposed sale of van Eyk Research to William M Mercer has once again raised some interesting questions about the providers of fund management research in this country.
Chief amongst them is the future of all research houses in Australia.
In recent times, many a research group has been forced to defend itself against industry speculation about its future.
Take Morningstar for instance. As recently as March of this year, a full four months after the high profile sacking of its former managing director Graham Rich, the research house had to issue a statement officially denying that it was pulling out of the Australian market.
But what is perhaps more interesting at the moment is how those who purchase research from van Eyk view the uncertainty surrounding the group, which must surely follow the collapse of its talks with Mercer.
Stephen van Eyk has already admitted that other research groups have attempted to poach some of his more senior staff since news of the discussions with Mercer became public.
Given van Eyk’s personal standing in this industry, one would expect, from a research point of view, there are unlikely to be any major repercussions for his group.
However, it is important to point out that had it been a funds management group in van Eyk’s position, there would have no doubt been an adverse reaction from research houses to the whole situation.
Van Eyk itself, for example, placed a hold rating on Rothschild Australia Asset Management’s International Equities fund after it initially announced that it was seeking an equity partner.
To be fair to van Eyk, all indications at this stage are that it was Mercer who made the initial approach to try and broker a deal between the two groups, suggesting on the surface at least that van Eyk was not hinging its future on the outcome of the negotiations.
But that will do little to appease many funds management groups that already believe research houses are not subject to the same level of scrutiny as the fund managers they rate. This was one of the most striking findings inMoney Management’sRating the Raters Survey, published in February.
This episode will no doubt just reinforce that perception, even if the results of theMoney Managementsurvey do suggest that van Eyk is one of the most highly rated research groups in the eyes of fund managers.
