Deutsche and Citigroup upgraded on Aust equities

Lonsechas upgradedDeutscheandCitigroupto ‘highly recommended’ in its latest Australian equity large cap sector review, joiningPerennial/IOOFValue,Investors MutualandUBS Global Asset Management.

Deutsche was upgraded to become Lonsec’s preferred option in the ‘growth’ space based upon the high calibre team, solid research process and strong relative performance, according to the report.

Citigroup was labelled as a “standout” ‘style neutral’ manager new to the Lonsec universe with a “differentiating team culture, impressive track record, low funds under management (FUM) and access to a wealth of investment team experience both domestically and abroad”.

Of the eight new managers assessed in the review,ABN Amrois also emerging as a strong alternative growth manager in this area.

Lonsec also commented on a number of trends observed during the review, such as an increase in ‘manage the manager’ style products in the style neutral area, and that the better performing managers tended to have exposure to listed property trusts (LPTs) and an overweight exposure to small and mid cap stocks.

The review also said that despite the rise in popularity of boutique managers, “Lonsec considers value still exists within a number of the larger managers. It is pertinent to remember that these managers reached their current high levels of FUM (despite recent small flows to ‘boutiques’) via sustained period of consistent performance.”

Lonsec assessed 26 managers in the 2003 review, including eight new managers. Of these, 12 managers remained unchanged and four were downgraded.