Fund managers get a new look at themselves

Mirror mirror on the wall who is the best fund manager of all?

Fund managers looking at themselves in the mirror of research house ratings must sometimes think that it’s like going to the crazy mirrors section of the local circus. In one mirror they look tall and thin and in another they are short and wide. Morningstar’s new ratings which were released today certainly reflect a different picture to their old system.

The best looking manager (with five stars) is the National Bank – an outfit which packages up funds, rather than doing the actual asset management, and the ugliest is Westpac, which not that long ago was a five star manager.

Morningstar has come up with the new looks by biffing out all the qualitative elements of its rating system and doing it just on performance numbers.

This makes the ratings objective, and fair – just like looking in the ordinary bathroom mirror.

Another of the major changes is that it has used a “normal” distribution. That is there is always going to be a winner and loser.

Assuming this new rating system is transparent and equitable, can we then say that the changes in ratings show the level of subjectivity and bias in the old system?

After all some people did have the view that mates got rewarded with higher ratings than they deserved.

Morningstar’s new boss Scott Cooley acknowledges that there was probably a positive bias in the ratings – just like sharebrokers always have buy, accumulate or hold ratings, but few straight sells.

However, he doesn’t say that mates got a good deal.

While the new system has been well-received by some others aren’t so happy.

People on the move

The biggest shock of the week was Fiona Judd’s decision to exit Broadbase and join SAM – Alex Fowler’s Strategic Asset Management group. She says Broadbase hadn’t done anything to make her move (although we hear stories that one large fund manager tried to buy the business), rather it was a meeting of like minds on investment philosophy with SAM.

New Zealand’s answer to Robert Kiyosaki is……

Martin Hawes. Martin’s latest book, Get Rich, Stay Rich exudes Kiyosaki, but is better as it’s New Zealand based and doesn’t rely so much on the folksy Rich Dad Poor Dad theme.

What’s interesting about the book is that Hawes is positioning himself as a financial planner in the “life planning” mode.

To read a review on the book click here
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