Morningstar moves on quant strategy
MorningstarNew Zealand is approaching fund managers with a proposal to move to a quantitative only model for managed funds research.
ING New Zealand managing director Paul Fyfe has confirmed withMoney Managementthat Morningstar recently approached them to discuss the new research model, and are presently in discussions on how this could work in the future.
“They [Morningstar] are giving some consideration to quant and we are in early discussions with them,” he says.
It is one of three alternatives Morningstar New Zealand is currently reviewing as part of an overall review of its business and research process.
According to Morningstar New Zealand’s manager Ross Weavers, the other two options are to continue to use both a qualitative and quantitative model, or continue to use qualitative research but use it as editorial on top of a quantitative research model.
While ING is currently working through with Morningstar what these proposals are, Fyfe says he is sceptical over what it will mean to investors and financial advisers.
“It will provide a historic view on products, which is little or no value to investors. There is also a question of the value to advisers other than as a track record.”
Fyfe says he is not sure why Morningstar would not remain both qualitative and quantitative focussed. While he says they have not reached the point in the discussions to have to decide on what ING would do should Morningstar decide to provide quant only research, Fyfe says they may have options with other research houses.
“We currently invest in a lot of research from research companies. If they [Morningstar] went that way, we would just take the results out of the paper,” he says.
The moves by Morningstar in New Zealand come amidst continuing industry speculation that the research group would also pull out of qualitative ratings in Australia.
Morningstar in Australia has consitently denied this is so, however, the group's operation in the US, UK and Hong Kong all use a quantitative model of research.
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