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I am pleased to confirm the new Risk Tolerance Questionnaire will go live on 16^th July 2011.

Morningstar’s primary goal and driving force has always been to equip investors and their advisers with accurate, timely and insightful data, research and tools that enable them to make better, more informed investment decisions.

The BBC Panorama programme 13 June 2011 – ‘Can you trust your bank’, in our view highlighted the problem with transactional/sales driven so called ‘advice’.  The programme’s focus on poor ‘advice’ through illustrations of individual behaviour within a number of banks highlights the need and value of truly independent advisers, who establish a detailed knowledge of their clients and a long term non-transactional focused relationship.

Financial Advisers, powered by Morningstar, can be certain that they are supported by a business that has their client’s investment interests at the forefront.  Morningstar provide your business with a scalable robust investment process, one that you can be confident of and your clients happy with.  In mid July we will enhance that process with the release of our latest risk profiling tool which has taken into account the FSA’s good practice guidance.  It’s important to make clear that tools should provide structure and promote consistency within your business but they are still just an aid to an adviser’s investment process. After all, the client is buying into your advice proposition and the role of Morningstar is to facilitate that.

Our latest RTQ goes further than ever in helping advisers and their clients understand the risk a customer is willing to take as well as their capacity for loss.  The Morningstar Risk Profiling Tool, has been created by Ibbotson Associates (part of the Morningstar Investment Consulting business), who are also responsible for creating the asset allocation guidance models.

Clearly, the recent review of wealth management firms, where 14 out 16 firms posed a high or medium-high risk of detriment to their customers, tells us it’s not just the banks that have issues executing best advice practices and underlines the importance of having a robust investment process in place while being supported by a truly independent business partner such as Morningstar.

Posted in: Morningstar,

We here at Morningstar are very proud to announce a strategic partnership with Technical Connection to deliver a gap fill day in September as well as ongoing content and commentary on this blog. Technical Connection are the financial services sector’s pre-eminent supplier of technical insight, support , CPD and proposition development on all aspects of tax, investment, protection, pensions and all aspects of the financial planning process.

Technical Connection is based in Staple Inn, London and is led by Tony Wickenden and John Woolley.
You can find more about their products and services, including a free trial of Techlink Professional, technical connections knowledge management, research, business generation, client communication and CPD plaftorm here: www.technicalconnection.co.uk and www.techlink.co.uk

Below is a brief sample of some of the content you’ll find on the Techlink website:

DWP Consults On Regulations To Permit Reduction Of Pension Benefits Where Scheme Meets Member’s Annual Allowance Charge

SYNOPSIS: The DWP is consulting on amending regulations which are designed to enable a member’s scheme benefits to be reduced where he has elected for his scheme to meet all or part of his annual allowance tax charge.

The Government has confirmed that it will permit pension scheme members subject to an annual allowance charge of more than £2,000 to elect for all or part of that charge to be paid by their scheme with their benefits being appropriately reduced to allow for this. Legislation to enable this has been included in Schedule 17 to the Finance (No.3) Bill 2011. However, Section 91 of the P..continued on the Techlink website

RLP Savings __

SYNOPSIS: The tax benefits of an RLP make it a “no brainer” for employee life cover

The following example illustrates the significant savings that can be secured through the provision of life cover for an employee through a Relevant Life Policy.  Provided all the conditions are fulfilled (including the absence of a tax avoidance motive) there is no statutory limit on the level of cover/premium. In the example, comparing the cost of providing the same life cover through a..continued on the Techlink website

France To Introduce Property Tax For Foreign Owners __

SYNOPSIS: France to introduce a 20% tax on rental value on holiday homes.

The French Government has approved a new tax on non-resident property owners which would affect British people who own homes in France. The tax will be debated in the French parliament in July and if enacted will come into effect next year.  The tax will be set at 20% of a property’s nominal rental value and is being seen as a second owner levied tax on top of the current taxe fonciere (levi..continued on the Techlink website

Discounted Values Under Discounted Gift Trusts __

SYNOPSIS: The recent decision in the sex equality case of Test-Achats raises questions as to whether the current method of valuing the income rights under Discounted Gift Trusts needs to be revised. HM Revenue and Customs has now made a statement on this.

The Discounted Gift Trust (DGT) enables an investor to invest a cash sum in a single premium bond that is held subject to a special trust that gives ‘income’ rights to the settler whilst alive and death benefits to a trust – typically a discretionary trust…continued on the Techlink website

Technical Connection

020 74051600
Derek.Lovell@technicalconnection.co.uk
Clare.Thomas@technical connection.co.uk

The gap fill day is scheduled for September 14th in London. For further details please call 0203 107 0040 or email events.rsvp@morningstar.com.

Posted in: Events, Morningstar,

Morningstar's Holly Cook with M&G's Head of Fixed Interest Jim Leaviss

If you attended the Morningstar Investment Conference earlier this month and you’d like to hear more from some of this year’s speakers, their post-presentation interviews are available below. If you didn’t attend and you’d like to hear Richard Buxton’s take on UK equities, or Robin Batchelor’s view on global commodities markets, to name a few, have a look and put next year’s conference in your diary!

Jim Leaviss (M&G): M&G’s Head of Fixed Interest explains his outlook for inflation and discusses vehicles to protect against rising prices

Burns: Know What You Own in ETFs: ETFs suit investors both large and small, but the right investment idea can be completely ruined by bad execution of that idea, says Morningstar’s Scott Burns

Collings: Emerging Markets Far Safer In Long Term: HEXAM’s Bryan Collings says focusing on short-term risk when investing in emerging markets is akin to creating a “weapon of mass wealth destruction

Dr Savage: Monte Carlo Modelling in Everyday Life: Drs Paul Kaplan and Sam Savage explain how stochastic modelling and Monte Carlo simulations are used in everyday life as well as asset allocation theory

Bonham-Carter: Industry Faces Multiple Challenges: Jupiter CEO Edward Bonham-Carter says the investment industry is just starting to address the challenges of rising longevity and a changing pension environment

Thompson: Stable Career Deserves Riskier Portfolio: Ibbotson Associates’ John Thompson explains how a more volatile career choice deserves a more conservative portfolio, and vice versa

Rogoff: The Tech Sector is Awash with Cash: Polar Capital’s Ben Rogoff says the tech sector is unique in terms of its net cash position, but large-caps are generally not the best place to invest

Jordison: A Dull Outlook for UK Property: Don Jordison of Threadneedle Property says there’s little risk of major upside or downside from here, but UK property has some solid areas

Abercrombie: European Banks Cheap for a Reason: Schroders’ Justin Abercrombie outlines three potential fat pitches–volatility in store for European financials, a less discerning GEM investor, and undervalued defensives

Greetham: Our Model Says We’re in Overheat Stage: At the Morningstar Investment Conference, Fidelity’s Trevor Greetham outlines how various assets perform in differing stages of the economic cycle

Taggart: Don’t Invest in CEFs Just for a Discount: Morningstar’s Mike Taggart says investors should select closed-end funds that primarily suit their portfolios; any discount should be considered a secondary bonus=

Stewart Cowley (OMAM): The Head of Fixed Income at OMAM explains why investing in government bonds currently “doesn’t make any sense” and discusses more attractive ways to protect one’s investment.

Richard Buxton (Schroders): Schroders’ Head of UK Equities says the continuation of good profit growth, good cash flow and balance sheet repair means there is plenty of opportunity in UK equities.

Robin Batchelor (BlackRock): BlackRock’s Robin Batchelor says  smaller oil companies don’t have the same volume growth challenges that larger integrated oils players face.

Posted in: Events, Morningstar,

It was fantastic to see so many of you at the conference this year, we sincerely hope you that enjoyed yourself and that you came away feeling energized and full of ideas. If you missed any of the presentations at this year’s conference or just didn’t manage to take notes fast enough, below are links to the slides from each presentation. Videos of many of the presentations will be available soon.

Enjoy!

• Jim Leaviss

• Scott Burns

• Crispin Odey

• Bryan Collings

• Drs. Kaplan and Savage

• Mark Tennant and Edward Bonham-Carter

• John Thompson

• IFA Debate

• John Thompson Gap Fill Session (points collected by on-site attendance only)

• Ben Rogoff

• Don Jordison

• Justin Abercrombie

• Trevor Greetham

• Mike Taggart

• Stewart Cowley

• Richard Buxton

• Robin Batchelor

Posted in: Morningstar,

Over two days jam-packed with investing passion and expertise, attendees of the Morningstar Investment Conference learned that Schroders’ Richard Buxton is kept awake at night by the sovereign debt crisis (and his two new kittens), heard Old Mutual’s Stewart Cowley compare the US to an “80 times leveraged hedge fund”, and had an opportunity to contrast this with comments from Fidelity’s Trevor Greetham that Obama’s pro-growth stance is the way to go.

No fewer than 20 leading investment specialists imparted their knowledge on the past, current and future investing environments, plus additional insight into their personal areas of expertise. There was an awful lot of talk about the US economy and monetary policy. “The US is acting like an emerging banana republic,” opined M&G’s Jim Leaviss, while Stewart Cowley made his thoughts—verging on disgust—at the Obama government’s current policy firmly known, and in stark contrast Trevor Greetham applauded the US stance and instead chastised European leaders for not following in their footsteps.

The highlights are too numerous to mention but stand-out memories include HEXAM’s Bryan Collings providing a staunchly bullish view of emerging markets opportunities, in which he said it is highly unlikely that emerging market growth will lose momentum unless there is a major crisis that hits all the developing economies, and the only economies able to trigger such a crisis are developed markets. Polar Capital’s Ben Rogoff gave an impassioned presentation on the tech sector, successfully managing to make cloud computing and software as a service (SAAS) sound not only almost sexy but also like a particularly exciting area of investment. Threadneedle’s Don Jordison displayed such confidence in his team’s ability to look after clients’ money in the property space that he quipped that if a fund has “Threadneedle” at the start of its name then it’ll outperform. And, in addition to his feline experiences, Richard Buxton told the 300-strong audience that UK corporates are in notably good health and consumer-driven stocks are even starting to outperform, much to his pleasant surprise.

Full coverage of each presentation can be found at Morningstar.co.uk.

Posted in: Morningstar,

After months of planning and anticipation, the 2011 Morningstar Investment Conference takes place this week at the Park Plaza Riverbank hotel in London. We are extremely excited to have so many advisers registered to attend this year and can’t wait to catch up with familiar faces and meet new ones. For a preview of the conference and the agenda, have a look here:

2011 Morningstar Investment Conference preview

Please stop by the Morningstar booth and meet our team if you haven’t done so already. We will be available to discuss the Adviser Workstation and provide training as space permits. We’ll also have quite a few fund analysts on hand so please take advantage of their insight and expertise.

Can’t wait to see you all there!

Posted in: Morningstar,

Title: Closed-end Funds – The Mechanics of Investing
Location: online
Link out: Click here
Description: While closed-end funds, in the form of investment trusts, were the grandfather of professional investment management, the open ended fund has grown to dominate the diversified investment product market. Yet last year was a bumper one for new investment trust launches with both costs and performance appearing to favour the closed-end market.

But investment trusts have largely been ignored by an adviser market locked into remuneration patterns difficult to replicate through the investment trust structure, while access to their shares has also proved a stumbling block. All this seems set to change with RDR demanding a wider understanding of the investment opportunities available to clients and platforms increasingly willing to facilitate dealing in the shares of investment trusts.

We will be looking at how you can use closed-end funds to the benefit of your clients and endeavour to demystify the issues surrounding access to this long established and potentially rewarding investment vehicle so that they may be properly considered alongside more traditional options.

Start Time: 13:00
Date: 2011-04-13
End Time: 14:00

Posted in: Morningstar,

Morningstar handed out its annual fund awards last week – congratulations to the winners! A quantitative methodology was used to screen for the top 10 funds in each category then our analysts chose the winners. Without further ado the winners are listed below:

• UK Large-Cap Equity Fund: Troy Trojan Income
• UK Mid-Cap/All-Cap Equity Fund: BlackRock UK Special Situations
• UK Small-Cap Equity Fund: Standard Life UK Smaller Companies
• Asia Pacific Equity Fund: First State Asia Pacific Sustainability
• Global Emerging Markets Equity Fund: First State Global Emerging Markets
• Europe ex-UK Large-Cap Equity Fund: CF Odey Continental European
• Europe Large-Cap Equity Fund: Threadneedle Pan European
• Global Large-Cap Equity Fund: Ecclesiastical Amity International
• GBP Corporate Bond Fund: M&G Strategic Corporate Bond
• US Large-Cap Equity Fund: Smith & Williamson North American Trust
• Specialist Equity Fund House: MFS Investment Management
• Specialist Fixed Interest Fund House: M&G Investments
• Multi-Asset Fund House: Threadneedle Investments
• Large Equity Fund House: First State Investments
• Large Fixed Interest Fund House: Allianz Global Investors

For a breakdown of the methodology used to pick the winners, click here.

Posted in: Morningstar,

Today, March 3rd, 2011 Morningstar will be presenting its 2011 fund awards to fund managers and representatives of fund houses that have exhibited exceptional value to investors over the last 12 months. Morningstar is of course not alone in handing out fund awards so I thought it might be useful to examine what fund awards really mean.

It is awards season and there will be no shortage of press in the coming months about this fund winning that award and this fund house being recognized, but I think it’s worth looking at awards a little closer to see if they can actually give investors something worth thinking about.

Some awards are popularity contests – the same groups of managers win every year and the same fund houses are recognized for their perceived qualities. The judging process for these awards is not always 100% transparent either so while they may recognize popular funds or those that attracted large sums over the last year, these are not always the same as the best funds for investors. The time period over which a fund is judged may vary as well, possibly rewarding a big bet, while not considering a longer track record that is possibly more important for investors.

So in the spirit of transparency and with the intention of providing something valuable to investors, Morningstar’s awards methodology is summarized below:

• There are 2 categories of awards – 1 for funds within Morningstar Categories, and 1 for fund houses.
• For the Morningstar category awards, a quantitative screen is done looking at both performance and volatility over the last 1, 3 and 5 year periods with an emphasis on the last 12 months because the awards are given annually.
• The top 10 funds within each category are then vetted by Morningstar fund analysts who look at  investor accessibility, the accuracy of a fund’s stated mandate and if that fund can continue to outperform.
• For the fund house awards, Morningstar Risk-Adjusted Return (MRAR) is calculated for all share classes of all funds offered then a mean percentile rank is calculated using the MRAR of all share classes – the lower the mean percentile rank, the better the performance
• This mean score is then adjusted using a probability function to compensate for the different numbers of funds various fund houses offer.
• A qualitative review is then carried out to to ensure awards are not given purely based on performance. A loss of key talent, an increase in fees or decreased availability to retail investors may disqualify a fund house from receiving an award.
• Only those that provide Morningstar with full portfolio holdings data are considered for awards

A complete explanation of the methodology can be found here.

Check back here next week for a recap of the winners and some pictures of the event.

Posted in: Morningstar,

It’s been nearly a month since my last post and I’m just about settled into 2011, ready for another year of evolution. I think new year’s resolutions are a joke but if I had to have one it would be for our Friday afternoon 5-a-side team to break the .500 barrier this year! Not setting my sights very high I know but you haven’t seen us play…

I spoke with many of you in 2010 and I hope to get the chance to meet even more advisers this year at conferences, user forums and training meetings. We had our first user forum yesterday at our London offices so here’s a few thoughts on yesterday’s event and the year ahead of us.

• Yesterday’s user forum kicked off with a discussion of active vs. passive management philosophies. Peter Toogood, Director of Investment Services for OBSR, and Ben Johnson, Director of European ETF Research for Morningstar discussed the merits of both approaches and the fact the there is a place for both. Look for the presentations at Morningstar user forums this year to continue to provide expert analysis on investments and ways to improve your business.
• Income has become a hot topic and the need to find income producing investment products for clients is increasing. We are going to be looking at ways to address these needs and help advisers provide more research and analysis for income seeking investors.
• I conducted a small group training session at the user yesterday. Most of those in attendance were already Adviser Workstation users, a few were not. We covered the basic functionality – finding investment products, building searches, setting up models, producing client reports and some light asset allocation planning. Every single person in the room came away with more knowledge of how the system works but also of they can use it more effectively in their businesses. If you use Adviser Workstation and you want to get more from it, call me! 0203 107 0017.
• Integration with wraps and platforms was a huge priority for Morningstar in 2010 and 2011 will see this continued. The fact remains that software needs to be easy to use and it needs to work together with other technology solutions. Look for further integration this year to make it easier for you to provide top quality advice to clients.

If you have any feedback or questions concerning the above please comment below.

Posted in: Morningstar,