Give financial advisers confidence in their recommendation

Lonsec’s ratings are trusted by the industry as a reliable indication of an investment product’s overall quality and ability to meet its stated objectives. Financial advisers use Lonsec’s ratings and fund reviews to construct Approved Product Lists (APLs), construct tailored investment solutions based on qualitative criteria, and to support their best interest obligations when recommending products.

Our rigorous research and ratings process

Lonsec’s research process follows a structured framework of assessing a range of qualitative and quantitative factors and scoring these attributes relative to other financial products within the same sector. Lonsec does not believe there is a single ‘best’ way to manage money, meaning the research process we apply accommodates a range of investment approaches and styles.

Our research philosophy

We believe that investment research should be forward-looking and qualitatively skewed. Accordingly, qualitative factors generally account for 80% of the rating for most mainstream asset classes, with Lonsec’s assessment of people and process having the greatest impact on the research outcome.

Within the quantitative component, generally contributing 20% of the research outcome, there is an emphasis on the quantum and consistency of returns, the degree of ‘activeness’ to deliver alpha, the volatility of returns and the defensiveness of the financial product over three years and beyond.

Our rigorous research process is skewed towards qualitative factors

Key factors we assess

People and resources

  • Experience, team size, quality, stability, management of key person risk, qualifications, investment ‘culture’ and alignment of interests.
  • Contact with both senior and junior members of the investment team.

Investment philsophy

  • Clearly articulated.
  • Consistent – ‘true to label’.
  • Lonsec cross checks a fund manager’s stated philosophy with quantitative analysis. An example, being where an equities manager indicates that they believe in value style investing. Lonsec collates fund holdings data and uses a range of quantitative systems to ensure that the fund manager’s portfolio reflects the stated style characteristics.

Investment research process

  • Screening process, fundamental analysis, valuation methodology.
  • Efficacy of analysts’ models.
  • Accountability.
  • Lonsec typically request that fund managers use real investment examples, to highlight the research process.

Portfolio construction

  • Clear link from investment research.
  • Buy and sell discipline.
  • Management of unintended biases.
  • Top-down considerations.
  • Accountability.

Risk management

  • Risk limits.
  • Monitoring, accountability, methodology and frequency.
  • Pre and post trade compliance.
  • Operational due diligence.
  • No audit report qualifications.

Lonsec financial product review

  • Capacity.
  • Company/parent company issues impacting on fund manager.
  • Financial product focus and evolution.
  • Investor focus and commitment.

How we engage with you

Our team of investment analysts work directly with you to determine your fund’s capabilities and ability to meet your investment objectives.

  • Engagement

    Initial engagement and operational check of fund.

  • Agreement

    Execution of agreement and commencement of research process.

    Agreement

  • Data collection

    Quantitative information sourced from our data providers. Qualitative information sourced via questionnaire.

  • Onsite review

    Formal due diligence conducted with the fund’s key personnel and at least two Lonsec analysts.

    Onsite review

  • Follow up

    Follow-up questions and information via phone, video and further meetings as required.

  • Peer review

    Proposed ratings are debated with a quorum of senior analysts voting on the final ratings outcome.

    Peer review

  • Rating issued

    Report and financial product rating is published and made available to all Lonsec subscribers.

Get a rating for your investment product

Learn more about how our investment research team can work with you to ensure your investment product becomes a member of the Lonsec rated universe.

Call us on 1300 826 395 or email info@lonsec.com.au.

Peer reviewed ratings

Peer Review Committees are held following the review of each sector or financial product and are open to all analysts within the Lonsec Research team. Utilising the Lonsec ratings model all financial products and the proposed ratings are tabled at these meetings. The model forms the basis of all ratings discussions in order to leverage the knowledge and experience of Lonsec’s senior people.

Trusted by financial advisers

Our investment product reviews and ratings represent an objective assessment of a product’s ability to meet its stated objectives, allowing you to compare products across a wide range of qualitative and quantitative factors.

Let us partner with you

Engage our investment consultants to take your investment product strategy to the next level. Leverage our expansive financial product knowledge and research to enhance your asset allocation, manager selection and governance structures.

Important information: Any express or implied rating or advice is limited to general advice, it doesn’t consider any personal needs, goals or objectives.  Before making any decision about financial products, consider whether it is personally appropriate for you in light of your personal circumstances. Obtain and consider the Product Disclosure Statement for each financial product and seek professional personal advice before making any decisions regarding a financial product.