As part of our annual fund managers project in 2024, Peter and Paul did an audit of the research reports on our fund managers from our research providers - Morningstar, Lonsec and any others that were available to us. The goal was to see if there was anything we didn't know.
We didn't find things about the fund managers that we didn't know, but we did find out that the Australian based fund managers no longer carried out comprehensive research on New Zealand fund managers.
The investment research model generally works that the fund manager pays the researcher for researching them. If they don't pay, they don't get researched. Morningstar is a little different to that in that they also collect a lot of data, so based on the database scraping that they do, they can produce a one page summary for most funds (even then some funds don't show up on the platform). Morningstar states that it does not charge fund companies to be rated, nor do fund companies commission research or ratings.
However, all companies have to have a commercial proposition to invest time and money in getting people to do the research. Lonsec has not researched New Zealand funds for quite some time, but we kept up our subscription as we got enough value from the Australian fund managers research. But again, business models change - and as we were told by an Australian fund manager 'I'm not going to pay Lonsec to come and do research on us, you get a different 'newbie' researcher each year, they ask the same questions and there is no institutional knowledge from year to year.
In addition, more fund managers have been releasing New Zealand based PIE versions of their Australian funds, which aren't researched by Lonsec. As a result we cancelled our Lonsec research mid 2024.
Morningstar downsized their New Zealand operations over the last five years to basically no-one - so there is no research provided on New Zealand funds. However, a key monitoring tool for us is our monthly Investment Performance Analysis which uses input from Morningstar, so we continue to pay that subscription. [Also, we aren't overly impressed with the boiler plate and templated reports that are produced].
As our clients are aware, we do much of our research. As a result of an extensive project in 2023, and ongoing monitoring and meetings, we know our fund managers and the funds that you are investing in well.
However, there is another part to investment research and that is helping us with having a long term framework for setting our asset allocations. We have historically used Morningstar for this - but they stopped providing this information in 2023. Our additional research was farrelly's - but this is quite Australian oriented (although there is a New Zealand version that we have subscribed to), with exposure to investments that aren't as readily available as liquid investments in New Zealand.
As a result at the end of 2024, we made the decision to also suspend our subscription to farrelly's and replace these with the New Zealand based research from Mapua Wealth (previously called My Fiduciary). This provides us with New Zealand focused frameworks which we can use with our clients.
Mapua Wealth also provides investment research, but there are a number of fund managers that Moneyworks recommends that they do not currently research. However, it may be that in the future we also contact Mapua Wealth to provide us with research on our fund managers to make sure that our ongoing monitoring is not missing anything!
Here's to hoping we won't have all the changes in investment research providers that we have had in the last five years (for at least another five years!)
