Lonsdale recommends IOOF -- for now
IOOFInvestment Manager and its subsidiaryPerennialwill need to make significant investments in growing staff numbers and infrastructure if they want to establish themselves as long-term players, according to the latestLonsdale Securitiesrating.
Lonsdale awarded IOOF a ‘recommended’ rating, citing Perennial’s consistent approach to asset management and the use of robust and transparent investment processes as positives for the group.
But Perennial will need to expand in size in order to build a solid reputation in the retail funds market. “We consider that Perennial is currently an adequately resourced investment management operation, both in terms of the number and the calibre of investment personnel,” the Lonsdale report says.
“Looking forward however, Perennial must ensure that its plans for significant expansion in funds under management and product are also matched by a commensurate expansion in staff and supporting resources/infrastructure,” Lonsdale says.
Perennial’s Value Management fund is gaining industry recognition, but the GARP style Australian Equities fund has failed to reach above-market return targets. Additionally, Perennial’s global equity team is small by international standards and will have difficulty competing with its global peers.
However, Perennial distinguishes itself from other fixed interest managers because it tries to add significant amounts of value as opportunities arise, rather than clocking small incremental gains over a long period of time. Though not being part of a large global network, the group also stands to benefit from existing alliances, which could be leveraged to improve capabilities both domestically and overseas, according to Lonsdale.
IOOF setup Perennial in 1999 as a joint venture with Perennial chair Mike Crivelli but it still remains one of the smaller players in the industry with just $1.8 billion in retail funds under management.
Lonsdale’s rating of IOOF is the second in two days. Yesterday IOOF was rated with a three out of five by research house Morningstar in its business and management strength ratings, which placed it in the middle third of all fund managers under its review.
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