Thanks to all of you who attended the Morningstar Investment Conference UK this year. In case you missed it we’ll have videos and more information coming soon.
For those who attended the trainings, here are some guides on what we covered:
Seamless Importing from Transact
Creating an Investment Growth Chart
Check back soon on the Training Page for more guides
We’re looking forward to seeing you at the Morningstar Investment Conference on May 15th and 16th. The Adviser Workstation team will be available throughout the two days to answer questions and show you product features. In addition, we’ll have some small group trainings open to Morningstar UK Advisers:
Tuesday, May 15th
8:25-8:55 Adviser Workstation Training over Breakfast
11:00-12:00 Drop-in Training
12:30-13:00 Training Over Lunch
16:00-17:00 Drop-in Training
Wednesday, May 16th
9:00 – 10:00 Importing Training Session – We’ll help you setup importing from your platform(s), including:
11:00-12:00 Drop-in Training
13:30-14:30 Lunchtime Training Session: Alerts, Research, Automated Client Reporting
16:00-17:00 Drop-in Training
Click here to register for the sessions above
Click here for the full Morningstar Investment Conference agenda
With less than a year to go until the implementation of the Retail Distribution Review (RDR), the Association of Investment Companies (AIC) has announced a series of free educational seminars on investment companies across the UK, targeted at financial advisers.
Beginning in London on June 14th, the AIC will visit ten other regions of the country during 2012. These seminars are aimed at helping advisers understand more about investment companies and as well as representatives from the AIC, they will feature presentations from some of the industry’s top analysts, managers and commentators. At the first event external speakers include: Simon Elliott, Head of Research, Winterflood Investment Trusts and Caroline Gutman from Morningstar.
The agenda for the seminars will include: how to research investment companies – ten key issues to consider, an analyst/manager’s overview of the investment company sector and current opportunities, a platform update and a Q&A panel. All sessions will run from 9.30am until 12.30pm on a Thursday or Friday and CPD points will be available from the CII, CISI and IFP. There is no charge for these events but places are limited and will be allocated on a first-come, first-served basis.
AIC Adviser Seminars
| Date | Location | Time |
| Thursday 14 June | London | 9.30 am – 12.30 am |
| Thursday 21 June | Birmingham | 9.30 am – 12.30 pm |
| Thursday 13 September | Exeter | 9.30 am – 12.30 pm |
| Friday 14 September | Bristol | 9.30 am – 12.30 am |
| Thursday 27 September | Leeds | 9.30 am – 12.30 pm |
| Friday 28 September | Manchester | 9.30 am – 12.30 am |
| Thursday 18 October | Durham | 9.30 am – 12.30 pm |
| Thursday 1 November | Brighton | 9.30 am – 12.30 pm |
| Friday 2 November | Southampton | 9.30 am – 12.30 am |
| Thursday 15 November | Glasgow | 9.30 am – 12.30 pm |
| Friday 16 November | Edinburgh | 9.30 am – 12.30 am |
Jacqueline Lockie, Training Manager, AIC said: “Following on from our series of online training sessions, which were very well received, these seminars are an opportunity for advisers to find out how investment companies might help them to meet their clients’ needs. With strong long-term performance and unrivalled income records, investment companies have many benefits which may have previously been overlooked. Throughout the seminars we will be endeavouring to answer advisers’ questions to ensure that they understand the features and characteristics of investment companies and explore any concerns they might have. We hope to meet as many of you as possible out on the road!”
To register for the AIC adviser seminars please phone Debbie Gibbons at the AIC at 020 7282 5555 or email eventsteam@theaic.co.uk . Please include your name, company, phone number, email and the event location.
10 Passes to be won for the Morningstar Investment Conference 2012 in association with the IFP
Morningstar are delighted to offer free two-day passes to the first 10 registrants to complete our online registration form – a saving of £99!
Join us at the Morningstar Investment Conference in association with the IFP (May 15-16, London), where we have once again assembled a line-up of high profile investment professionals to provide objective and clear insight into the opportunities that exist in today’s markets, as well as tips for areas to avoid. Their presentations will offer a variety of views and will enable rigorous debate. To view the full agenda (CPD accredited), click here.
Technology is the most popular investment sector right now, according to the latest global survey of professional money managers by BofA Merrill Lynch.
Hot on the heels of Apple (AAPL) announcing it would begin paying a dividend for the first time since 1995, the monthly BofA Merrill Lynch Global Research report reveals that fund managers around the world are piling into tech stocks. Specifically in the US, Europe and the UK, technology is the most popular sector.
“A net 33% of eurozone investors are overweight technology, up from a net 10% in February. The sector has overtaken automotives/parts to become the region’s most popular,” says the report.
But with all the attention and money flowing into technology, is the sector as a whole becoming too frothy? Gary Baker, head of European equity strategy at BofA Merrill Lynch Global Research says he does not have a strong view about whether tech is overbought. However, he notes that as Apple continues grabbing headlines, the world’s largest company by market capitalisation is driving public attention towards the technology sector as a whole.
While investing in Apple can be tempting, especially now that it’s offering a dividend, Morningstar analyst Michael Holt values the company slightly below the current market value, indicating that now is not necessarily an ideal time to buy.
In his latest research report, Holt writes: “We view this [dividend and share buyback] move as a positive for Apple, but our fair value estimate does not change as this simply represents a partial distribution of the $98 billion in cash and investments that we were already accounting for in our fair value estimate. This move is a positive, however, because it lowers the risk that Apple will pursue aggressive acquisitions or other riskier uses of cash.”
Currently, other UK-based technology companies that are gaining attention for capitalising on the booming smartphone and tablet market are ARM Holdings (ARM) and Imagination Technologies (IMG). However, Morningstar analysts believe these companies are currently trading above their fair market value.
On the other end of the spectrum, the least loved sector globally is the utilities sector, according to the latest fund manager survey. Banks, insurance and telecoms are also remarkably unpopular.
Specifically within the UK, the report shows a wide range of sectors have fallen out of favour, including construction, real estate, retail, utilities, financial services and telecoms.
Utilities are widely considered to have a broken business model so people are avoiding this sector, says Baker. Dividend cuts amongst utilities companies have also contributed to the sector falling out of favour with professional money managers, he says.
Yet even though utilities and telecoms are now widely shunned by money managers around the world, pharma companies have become rather popular, according to the survey. Pharma is the third most popular investment sector after technology and energy, according to the report.
It may seem odd that pharma has become so hot while utilities and telecom have been avoided, since all three sectors are generally considered to be defensive, safe options for investors during tough times. But right now, pharma is seen as the most desireable option since it still offers decent yields, says Baker. Investments in the sector have come despite the difficulties pharma companies are facing with expiring drug patents, he says.
The money manager survey by BofA Merrill Lynch compiled responses from 278 institutional investors who manage nearly $800 billion in combined assets. The survey was conducted between March 9 to 15, 2012.
By Alanna Petroff
Click here for the full agenda, or visit our website to register and for more information. Any questions, please contact Natalie Shattock at investmentconference@morningstar.com.
Dr. Paul Kaplan, Morningstar’s European Quantitave Research Director, will be presenting Asset Allocation in the 21st Century at our Belfast User Forum, April 19th @ the Fitzwilliam Hotel. Click here to see the schedule and click here to register.
In the meantime, here are some post-Financial Crisis myths debunked by Dr. Kaplan:
1. The global financial crisis was a black swan
This is perhaps the biggest myth about the crisis. By definition, a black swan is an unprecedented major catastrophic event. However, there were many previous such crises whose long history motivated the late Hyman Minsky—writing in the mid 1980s—to formulate his “market instability” hypothesis to explain past crises and predict this one. Indeed, UK investors need only to recall the early 1970s to remember a time of even worse markets when equity investors lost 74% over a two-and-a-half-year period and took over nine years to recover.
2. Diversification did not work during the crash
This myth is due to an exclusive focus on equities. While it’s true that equities lost value worldwide during the crash, the same is simply not true across the asset classes. In fact, during the crash, investors fled to safety and in so doing drove up the price of high quality sovereign bonds (especially US Treasuries) causing asset class diversification to work when it was needed most. So while US stocks lost 47% of their value for the year 2008, a portfolio of 50% US stocks, 40% bonds, and 10% cash would have lost a mere 16% of its value.
3. Modern portfolio theory is dead
The essence of Modern Portfolio Theory (MPT) is that investors should hold diversified portfolios such that reward cannot be increased without an increase in risk and visa versa. The limitations of MPT—as first formulated by Harry Markowitz in 1952— lay not in its principles but in the maths that he used. The maths simply could not handle the sort of extreme events that occurred during the crisis. Now, in confusing the maths with the principles, some have declared MPT dead. Nothing could be further from the truth. Now in 2012, we have powerful enough mathematics and computers to apply the principles of MPT in light of the types of extreme outcomes that markets produce from time-to-time with the advantage of far more robust models.
4. Asset allocation should be used to balance the sources of risk
Noting that portfolios created according to the principles of MPT lead to portfolios in which equity exposure is the primary source of risk, some asset managers are today switching to a “risk parity” approach to asset allocation. In this approach, an asset mix is chosen to achieve a portfolio where all asset classes contribute equally to the overall risk; this, they point out, is not the same thing as allocating the portfolio equally among the asset classes. Since this leads to a low risk/low return portfolio, the entire portfolio is then highly levered to goose up the expected return. (Why anyone thinks this is a good idea in a post-crash world is beyond me.) What the risk parity approach is missing is the fact that the sources of risk are also the sources of return. Since equities remain the main source of long-term growth, it follows that equities should be the main source of risk!
5. Fundamentally weighted indexes are better than market-cap weighted indexes
Since equities are the main source of growth for long-term investors, it is no surprise that someone will claim to have found a better way to invest in them. One such claim is that if we weigh stocks by “fundamentals” such as earnings, dividends, revenues, etc, rather than by market capitalisation, we can create better index funds. However, it turns out that this approach is nothing more than placing a value tilt on a portfolio. Since value titled portfolios over the long run tend to outperform the market, so do these fundamentally weighted index funds. The downside is that these products also do poorly when value investing in general does poorly.
This Morningstar article first appeared in City AM.
Nominees for Morningstar European Fund Manager of the Year Awards 2012 have been announced, and Adviser Workstation can give you a closer look at the managers, their funds and our Morningstar Analyst Ratings.
The Morningstar European Fund Manager of the Year Awards draw from the expertise of Morningstar’s European fund analyst team and recognise a select number of fund managers in Europe who have demonstrated excellence in the past year and in their stewardship of fund shareholder capital over the long term. The awards are presented in two distinct categories: Fund Manager of the Year: European Equity and Fund Manager of the Year: Global Equity.
The nominees for the Morningstar European Fund Manager of the Year Awards 2012 are:
European Equity:
Fabio Di Giansante, Pioneer Funds Euroland Equity
Charles Montanaro, Montanaro European Smaller Companies
Laurent Dobler and Arnaud Cosserat, Renaissance Europe
Global Equity:
J. Kristoffer, C. Stensrud, Knut Harald Nilsson, Cathrine Gether, and Ross Porter, SKAGEN Kon-Tiki
Andrew Headley and Charles Richardson, Veritas Global Equity Income and Veritas Global Focus
Rajiv Jain, Vontobel Global Value Equity and Vontobel Emerging Markets Equity
Nominations for the awards are made by Morningstar’s European fund research team of 30 analysts located in the United Kingdom, France, Germany, Italy, Spain, The Netherlands, Finland, and Norway. To qualify for a nomination, at least one fund under a fund manager’s leadership must have a qualitative fund rating assigned from Morningstar.
To find the funds in Adviser Workstation, run a search in the Open-End funds universe by going to New>Search>Open-End Fund.
In the first row under Field Name, scroll to find Manager Name, then type in the name and click GO. Once you’ve found the manager, click OK to add the name to the search.
You can add multiple managers at once by using ‘OR’ in each row of the search.
Quick Tip: When typing the name in the Manager Name box, select ‘Contains’ instead of ‘Begins With’ to search first names and surnames.
Visit the post on Analyst ratings to see read more about the managers.
The FSA recently published a list of FAQs from their roadshows on RDR. We’ve featured a few of them just below and have included helpful Adviser Workstation shortcuts.
**-If I consider a product, but I don’t feel comfortable recommending it due to its risky _nature, can I still call myself independent?
_**
__A firm should only hold itself out as giving independent advice if it is prepared to provide advice on all types of retail investment products that may be suitable for their clients. Such a firm may, however, after considering the market, take the view that certain retail investment products are unlikely to be suitable for their client base. If this is the case, then that firm would not need to carry out a comprehensive review of the market for these products for each of their clients. We would not expect firms when forming advice for a client to review the market for a product that would not be suitable, let alone to recommend such a product.
(Morningstar Quick Tip: Filter out any unsuitable products for your clients by building a custom filter in Adviser Workstation. See how to build a search by clicking here)
No one in a firm that holds itself out as independent should make a personal recommendation to a retail client unless that personal recommendation is based on a comprehensive and fair analysis of all types of retail investment products which may be suitable for that client.
(Morningstar Quick Tip: Use Morningstar Analyst Rating reports for independent, objective analysis on open-end funds, equities and investment trust funds. Click here to learn how to find the ratings)
-What is meant by relevant market in the context of independent advice?
_ **_A relevant market should comprise all retail investment products which are capable of meeting the investment needs and objectives of a retail client. To use the example of ethical products, for clients who only want these, it is clear that a range of products would never be suitable for them, namely non-ethical products. The relevant market for these clients would not include all retail investment products, but would include all ethical retail investment products. Relevant markets are defined by client needs, not by any other factor.
We expect it to be rare that an adviser could completely rule out advising on certain types of retail investment products on the basis that they will not be suitable for any of their clients, and to limit their advice to a particular relevant market. If they can identify a narrower relevant market, they should not hold themselves out as offering independent advice in a broader sense.
(Morningstar Quick Tip: Save a list of ethical and/or socially conscious funds to quickly add funds to a client’s portfolio. Click here to find out how)
Questions and responses taken from Financial Services Authority’s Finalised Guidance, February 2012. Click here to view the report and other FAQs
We’d love to know your thoughts on financial advisers’ websites, whether it be your own site or those of your peers. Please take a few minutes to complete our quick survey and help us track trends and attitudes towards financial adviser websites. We’ll be presenting our findings at the Adviser Forums next month. As a thank you for your time you will be entered into a prize draw to receive one of two £100 Amazon gift vouchers.
On completing the survey, your details will be placed into the Morningstar ‘hat’ and the lucky winners will be chosen at random. Winners will be chosen from all submissions received by March 12, 2012 and announced on March 20, 2012.
Thank you for your time and good luck!
This survey is no longer active.