S&P to move into fund ratings
Standard and Poors (S&P) have confirmed that the group will move into rating managed funds later this year, with equity funds the first to fall under the spotlight.
According to fund services directors Susan Shaw and David Collins the group plans to leverage off its current business of rating cash and bonds in the local market.
Collins says the group has been rating the cash and bond investments available on the Australian market for over 10 years and currently covers about 85 per cent of these investments.
S&P already rates managed funds in Europe and the US and Shaw says doing so in Australia was part of its long term global strategy.
However Shaw was not willing to put a deadline on the rollout of the first ratings rather stating that much of the background work was being completed.
"We are still getting the analytics right for assigning ratings on equity based funds," Shaw says.
The shift to rating managed funds has been due to a change in focus with the group looking closely at the retail end of the market according to Shaw.
"Our focus has been on the institutional and fund managers market but we realise we should also focus on the adviser end of the market and we are looking at that," Shaw says.
Collins says the group is aware that its entrance into the managed funds ratings scene puts them into competition with three entrenched players but feels this will not create a market squeeze.
"We recognize this is a competitive marketplace but we have been successful elsewhere and we are keen to get into markets in key countries like Australia," Collins says.
The move into ratings will be preceded by S&P offering funds data on local funds which it has already done in other markets, available through the group's website.
This data supplies information such as the size of the fund, key staff and history of the fund with local data being added shortly.
"The data is the building block for the ratings and they feed off each other with investors and planners wanting to work with both pieces of information," Collins says.
AUTHOR
Jason Spits
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