Tower remains a one star player
Morningstarhas reconfirmed theTowergroup’s one star rating which indicates a relatively ‘very poor quality’ fund manager.
Following a comprehensive qualitative reassessment of a number of Tower’s qualitative ratings, the manager has retained the same rating it was given by Morningstar back in December last year.
Incorporating Tower Australia Limited, Tower Australian Superannuation Limited and Tower Managed Funds Limited, the reassessment found that while some of the qualitative ratings were upgraded, these changes did not change its overall status.
The reassessment covered Tower’s corporate strength ratings, investment management rating, subcontracted investment management rating and sector strength ratings for international fixed interest, Australian equities, Australian equities (ethical) and international equities.
Morningstar reconfirmed Tower’s corporate strength rating at negative. The group has been involved in a strategic review undertaken by Boston Consulting since December last year, with the results of this review to be announced at the end next month.
Morningstar says until these results are finalised, business and marketing plans will remain uncertain and under development.
The ratings houses upgraded Tower’s investment management rating was from ‘negative’ to ‘neutral’ because it believes its investment teams have been resourced and stabilised since staff departures in January 2000.
Better monitoring of subcontract arrangements was also highlighted by Morningstar who says screening, closer on-site monitoring procedures and documentation could be further improved.
Compared to its peers, Tower’s funds have been average or below-average performers from both a risk and return perspective over the short, medium and long term over the past five years.
While there has been an increase in the number of Tower’s funds with a three star Morningstar rating and a fall in the number of one star funds, Tower does not have any five star funds and only two four star funds.
AUTHOR
Fiona Moore
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