S&P rates BT and Perpetual best in concentrated equities
Standard & Poor's (S&P) Fund Services has released its ratings of the Australian-equity concentrated peer group, including 13 funds from 12 managers.
BT Investment Management and Perpetual were both assigned a five-star rating, with S&P pointing to the managers’ stock-picking ability and their broad, stable, well-resourced teams as assets.
Two funds were rated for the first time, and the review also featured one upgrade and one downgrade.
S&P said the peer group reflected a variety of investment styles, including value, core/style neutral and growth managers — with the core/style neutral approach being the most common.
“Portfolios in this peer group usually have around 25 stocks, and are therefore less diversified than a typical Australian-equity fund,” said S&P Fund Services analyst, Tom Mills.
“Limits on active stock and sector positions are also less constrained, which gives the portfolio manager the flexibility to hold only the stocks it views most favourably. As such, concentrated funds can be considered to represent a manager's best investment ideas, and are therefore a good reflection of a manager's stock-picking ability,” Mills said.
Concentrated funds tend to exhibit higher tracking error and greater variability of returns in the short term, he said.
“Concentrated funds can offer the opportunity of higher returns, but with less diversification than non-concentrated strategies, and hence higher stock-specific risk,” he said.
Recommended for you
The FSCP has announced its latest verdict, suspending an adviser’s registration for failing to comply with his obligations when providing advice to three clients.
Having sold Madison to Infocus earlier this year, Clime has now set up a new financial advice licensee with eight advisers.
With licensees such as Insignia looking to AI for advice efficiencies, they are being urged to write clear AI policies as soon as possible to prevent a “Wild West” of providers being used by their practices.
Iress has revealed the number of clients per adviser that top advice firms serve, as well as how many client meetings they conduct each week.
