Highlights from Lonsec Research Report

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On Ibbotson's investment manager research process:

"Lonsec considers [Ibbotson's] manager research process to be comprehensive and well-articulated. The formal manager review process is comprehensive, with a vast amount of data collected and assessed. There is a strong emphasis on qualitative research, particularly in assessing the quality and skills of the manager’s key investment personnel."

On Ibbotson's portfolio construction:

"Lonsec considers [Ibbotson] to be quite innovative, [Ibbotson] having long held a preference for high-quality boutique managers. [Ibbotson] is willing to be the first institutional client to invest in a particular manager. The smaller size of the [Ibbotson] Sector Trusts enables the manager to access some external funds that may not be available to larger participants. Lonsec views this positively as it indicates that [Ibbotson] is quite efficient in identifying new opportunities, and is willing and able to ‘back’ its own views."

On Ibbotson's investment team:

"[Ibbotson] has considerable resources dedicated to the role of external manager research, review and portfolio management... Lonsec considers the investment team to be well-resourced, and appropriately structured. Lonsec is supportive of the sector specialist approach, believing it encourages greater accountability and specialist insight."

On Ibbotson's alignment of interests:

"Lonsec considers alignment of interests at [Ibbotson] to be relatively high. Lonsec is pleased to see that a high percentage of variable remuneration is linked to performance of the funds, and that investment performance is measured across a range of time periods. Lonsec believes this approach leads to a closer alignment of interests of portfolio managers and investors. Lonsec also considers the ‘innovation’ component to be an exciting initiative, encouraging market-leading research and independent thought."

On what differentiates Ibbotson from competitors:

"[Ibbotson] differentiates itself from other peers assessed in its extensive use of alternatives, a commitment to remaining small enough to ensure client outcomes are not compromised, local decision-making autonomy, and arms-length global research partners... The ability to leverage off other Morningstar resources (including the asset allocation tools and expertise of Ibbotson Associates and to a lesser extent Morningstar manager research) are seen as key positives for the [Ibbotson] team..."

The original version of the Lonsec research report referred to Ibbotson's former identity as Intech.

The Lonsec Limited ("Lonsec") ABN 56 061 751 102 rating (assigned December 2009) presented in this document is limited to "General Advice" and based solely on consideration of the investment merits of the financial product(s). It is not a recommendation to purchase, sell or hold the relevant product(s), and you should seek independent financial advice before investing in this product(s). The rating is subject to change without notice and Lonsec assumes no obligation to update this document following publication. Lonsec receives a fee from the fund manager for rating the product(s) using comprehensive and objective criteria.