Mind your managers, warns Lonsec
Ratings house Lonsec has urged financial advisers to take particular care when recommending both Australian and international long/short funds and not to assume one fund represents a direct replacement for another.
The warning is contained in the latest Lonsec review of the Australian and international long/short equity sector, which noted that factors such as the maximum short exposure permitted, cash levels, use of derivates, and levels of gearing could vary considerably from manager to manager.
As such, advisers needed to be cognisant of the way in which they intended to utilise selected funds.
Despite the ratings house's warning to advisers to exercise caution, the Lonsec sector review resulted in six funds being awarded the company's highest rating of 'highly recommended', with eight receiving 'recommended' ratings.
The funds to receive the coveted 'highly recommended' rating included the Acadian Global Equity Long Short Fund, the Colonial First State Global Resources Long Short Fund, and the Goldman Sachs JBWere Global Flex Fund, while the Platinum Asia, European, and International Technology Funds were awarded 'highly recommended' ratings in the regional long/short equity universe.
Lonsec said funds rated for the first time included the 5 Oceans World Fund, the Barclays International Share Partial Long/Short Fund, and the K2 Asset Asia Fund, which had received 'recommended' ratings, while the Deutsche/RREEF Global Opportunities Fund had received an 'investment grade' rating, which had subsequently been downgraded to 'fund watch'.
Lonsec said the HFA International Share Fund had been placed on 'fund watch', effective from January 20, "due to Lonsec's increased operational concerns with the HFA Group".
It said this also reflected the rating applied to the HFA Diversified Investments Fund, which was HFA Asset Management's largest fund as at June last year.
AUTHOR
Mike Taylor
Recommended for you
Wealth Data has revealed the top five licensees for financial adviser growth over the September quarter, with more than 150 advisers joining in Q3 overall.
Former Sydney financial adviser, David Valvo, has pled guilty in court to a charge of dishonest conduct.
Building a network of mentors and coaches with varied skill sets could help women achieve their career goals, according to an FBAA executive.
AMP has reported its Q3 results and provided a progress update on the divestment of its advice division to Entireti.
