Highlights from Lonsec Research Report

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. Lonsec considers this skew to qualitative analysis to be sound and the formal manager review process to be comprehensive." 

On Ibbotson's portfolio construction:

"In terms of portfolio construction, Lonsec considers Ibbotson to be quite innovative, having long held a preference for high quality boutique managers. The relatively small size of the Ibbotson Single Asset Class Multi-Manager Funds enables access to some fund managers that may not be available to larger peers. Lonsec views this positively as it indicates that Ibbotson has the ability to identify new opportunities." 

On Ibbotson's investment team:

"Lonsec considers the Ibbotson 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. The investment team is adequately experienced with an average of 14 years in the industry which is broadly in line with the Lonsec sector average."

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 global research partners through membership of the Morningstar group." 

"Ibbotson continues to hold one of the highest allocations to alternative assets within the Lonsec peer group. Lonsec is supportive of this approach believing alternative assets can add diversification to traditional asset classes and provide diversified portfolios with the potential for superior risk adjusted returns." 

The Lonsec Limited ("Lonsec") ABN 56 061 751 102 rating (assigned November 2011) 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.