AWS Support Resources

This week we ran the second of our Adviser Forums where we were joined by the FSA who outlined what is expected from advisers post RDR.   We had a great turn out at both events, with 60 advisers joining us in Edinburgh and 62 in London. Colin Wilcox of the FSA outlined the requirements of professional standards, and talked about the scope of service advisers would provide.  When the advisers in the room were asked if they were likely to go Restricted or Independent, the majority at both events stated Independent – this is very different to what the press is telling us.  There was discussion on how independents would provide a fair and comprehensive analysis of the market and having just seen the capabilities of Adviser Workstation, the FSA said that with tools like AWS and others like it, it was very clear that this type of analysis is achievable.  The FSA highlighted that there is not an issue with the implementation of a Central Investment Proposition, as long as the advice given was suitable for the client.  It seems to me that using models works really well as long as you are also in a position to research alternatives if the models are not suitable for the client.

The FSA talked about their expectations for Adviser Practices to have client centric propositions that work for your individual businesses and the importance of having the right controls in place to deliver that proposition.  From the Q/A session that took place after the presentation, it’s crucial for advisers to have systems in place that can back up their proposition and help action and review the advice given.  One of the questions came from an adviser who asked how much depth is required in terms of analysis, and he wanted to know if it was necessary to understand the underlying holdings funds are invested in – the answer was yes.  This is the type of analysis where AWS can provide you with the answer in seconds.  My view is that technology will assist advisers in putting those business controls in place and providing the all important audit trail on  how decisions have been made and ensuring that the recommended investments continue to be suitable for the  client.

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Posted in: Events, IFA News and Commentary, Morningstar,

Next year, the 7th annual Morningstar Investment Conference will take place on the 14 and 15 May 2013 at the Park Plaza Riverbank Hotel in London.

At next year’s event you can expect to see an agenda focused around educational insight covering a broad range of investment-based topics.

For a look at the 2012 event, please click here

To register your interest and to receive updates, please complete a short form

Or visit our website

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Posted in: Events, IFA News and Commentary, Marketing, Morningstar,

On 11 January we launched the first Morningstar Analyst Ratings for Closed-end Funds. Our coverage now comprises around 70 funds and still growing. At Morningstar we believe wholeheartedly in the investment trust structure and think these funds have much to offer their shareholders.

There was much to do behind the scenes to enable us to give qualitative ratings to investment trusts. We recognise the need for advisers to be able to compare all funds on a like-for-like—and vehicle-agnostic—basis. While this sounds fairly straightforward, the reality is that it’s a little more complex to get the right information.

We have been working hard to get investment trusts to provide their full holdings on a full and frequent basis—something they haven’t had to do before. We’ve then been able to categorise them according to our Morningstar categories, which are holdings-based, to enable that true peer comparison.

With the funds classified under our proprietary categorisation system, we could then enhance the value of our Morningstar Rating by calculating it using an investment trust’s NAV rather than share price. One of the aims of the Morningstar Rating is to enable a comparison of manager skill, rather than performance that’s beyond his or her control. By classifying investment trusts into our Morningstar categories, you can now see the full peer group of like-minded funds and make more meaningful comparisons.

With full holdings data now available on a regular and frequent basis on many funds, we’ve been able to undertake detailed analysis of those funds and start to issue ratings and reports. The funds we’ve covered so far have been some of the largest by fund size, and also the most familiar or prominent names, but crucially it’s also been where we have good transparency and access to the fund managers. That said, we want to make our coverage meaningful and research those funds on which you want our opinion so there are others on our radar where we’re still working on getting that data and access.

So far we’ve covered funds across a range of sectors, and at this stage we’re focused on the more traditional, equity funds – so global equity, UK, European, emerging markets, Asia and also some of the sector funds.

Transparency is still a challenge, although we’re delighted with the response we’ve had to our paper that we released in May: ‘Investment Trusts: Why Transparency Matters.’ In this paper, we wanted to demonstrate why it’s so important for investment trusts to disclose full holdings and on a frequent basis. Investors and their advisers need to have timely information to be able to fully understand risks to which they are exposed. The response has been overwhelmingly positive—not just from those funds on which we weren’t getting data, but we’ve also seen an increase in frequency from others where we were getting the holdings on an annual or semi-annual basis and this has now moved to quarterly or even monthly.

It’s not just the asset managers that have responded positively, it’s the funds’ boards of directors too. Like us, they see the RDR as an opportunity to bring their funds a little more onto the radar than has been the case in the past. To that extent, more and more they’re looking beyond just their AIC sector peers for comparison purposes when reporting to shareholders and we’re encouraged to see their interest in our use of the Morningstar categories.

The biggest challenge is, still, access.  We want to see investment trusts as a feature on the major fund platforms to encourage their wider use. It’s not an impossible task: Alliance Trust Savings has been offering them on their online platform for years.

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Posted in: IFA News and Commentary, Morningstar, Research,

The AIC will be hosting a number of training seminars on closed-end funds over the next three months around the UK. The agenda for the seminars will include how to research investment companies – 10 key issues to consider, an analyst/manager’s overview of the investment company sector and the current opportunities, a platform update and a Q&A panel. Speakers will include: Jacqueline Lockie, the AIC’s Training Manager, Annabel Brodie-Smith, the AIC’s Communications Director, investment company analysts/managers, platform representatives. CPD points are available for these sessions from the CII, CISI and IFP and advisers need to individually highlight what gaps the training fulfils.

For more information, visit: http://www.theaic.co.uk/Adviser-Centre/AIC-adviser-training-seminars/

Upcoming events:

Exeter
Thursday 13 September 2012 9.30am – 12.30pm
View event details

Bristol
Friday 14 September 2012 9.30am – 12.30pm
View event details

Leeds
Thursday 27 September 2012 9.30am – 12.30pm
View event details

Manchester
Friday 28 September 2012 9.30am – 12.30pm
View event details

Brighton
Thursday 1 November 2012 9.30am – 12.30pm
View event details

Southampton
** Friday 2 November 2012 **9.30am – 12.30pm
View event details

Glasgow
Thursday 15 November 2012 9.30am – 12.30pm
View event details

Edinburgh
Friday 16 November 2012 9.30am – 12.30pm
View event details

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Posted in: Events, IFA News and Commentary, Morningstar,

We’re pleased to announce Morningstar has been nominated for the 2012 Aberdeen Platform Awards as the leading independent planning tool provider.

If you’re happy with the service Morningstar provides, please vote for us: The Aberdeen Platform Awards

Morningstar was nominated in the category of Leading Independent Tool Provider, which is for the independent toolset available to advisers that they most value to support their proposition. It may be an end-to-end solution or a tool for one or more link in with the advice chain.

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Posted in: Events, IFA News and Commentary, Morningstar, Research,

Did you spot the latest Morningstar®U.K. Market Performance Chart in last week’s Investment Week or Professional Adviser magazine?

If you haven’t seen it before, the annual chart is a historical snapshot of how various asset classes have behaved since 1970 including how economic indicators and political events have influenced investment performance historically.  For example, the U.K. stock market experienced severe declines in 1973–1974 (oil crisis) and 2008–2009 (subprime crisis) that took a significant time to recover.

It also shows the growth of £100 invested in five major asset classes (U.K. equities, U.S. equities, European equities, U.K. bonds, and cash), across three hypothetical portfolios (adventurous, moderate, and cautious), plus inflation since 1970.

Click here to see a chart sample. You can find more general information here.

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Posted in: IFA News and Commentary, Morningstar, Press Releases, Research,

On Wednesday 13 June it’s the next in our series of webinars from the Best Advice: Closed-end Fund Forum group.  This month our topic is centred around some of the quirks of investment trusts and how to manage these.  Advisers have traditionally been put off investment trusts by their perceived complexity. In reality, closed-ended funds are no more complex than open-ended, but it is worth examining the ‘tricks of the trade’ and how expert investors in investment trusts manage the quirks of investment trusts, notably discounts, liquidity and governance.

We will also be talking through how some of our panel members use investment trusts and where open-ended funds might be more appropriate.

I’m delighted to be joined on the panel by Julian Cane, manager of F&C Capital & Income (FCI) and Peter Walls, of small-cap specialists Unicorn, who are representing the investing side; James Moseley, head of sales at Winterfloods and representing the broker’s perspective; and William Hemmings, Aberdeen’s Head of Closed-end Funds. One of William’s responsibilities is liaison with the boards of Aberdeen’s funds so he brings yet another perspective to the table.

We’d love to hear the questions you want answered. You can submit questions in advance through the ‘feedback’ form at the bottom of this page or by emailing me directly.

Please join us in our discussion by attending here: http://www.brighttalk.com/r/dQB

If you are unable to join the live webinar, you can watch again on demand afterwards. During the live event you will be able to submit questions to the panel and take part in audience votes.

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Posted in: Events, IFA News and Commentary, Morningstar, Research,

This BrighTalk Webinar will examine the ‘tricks of the trade’ and how expert investors in investment trusts manage the quirks of investment trusts, notably discounts, liquiditiy and governance. Investors will also talk through where they use investment trusts and where open-ended funds might be more appropriate

Investment Trust Quirks… And How to Manage Them
Live at: June 13,  2012 1:00 pm

To join the webinar, click here

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Posted in: Events, IFA News and Commentary, Research,

HMRC’s latest ISA bulletin has raised the question of eligibility for stocks and shares ISAs of some funds post RDR.

The issue revolves around the ‘5% test’, which says that for an investment to be eligible for a stocks and shares ISA, at the date of purchase:

· there must be no guarantee or agreement that the investor would receive 95% or more of their purchase price at any time in the next five years, or

· the nature of the investments held must not significantly limit the risk to the investor’s capital to 5% loss or less at any time in the next five years.

The test compares the price paid by the investor for the investment with the amount receivable on the sale.  It thus applies after any initial, terminal or regular charges.  If the investor is ‘certain or near certain’ to receive 95% or more of their original purchase price, then the 5% test is not satisfied. Depending upon its nature, the investment may alternatively qualify to be held in a cash ISA.

HMRC is concerned that post RDR some funds, which currently carry sufficient charges to pass the 5% test, will no longer do so. It quotes the example of a fund with an initial charge reduced to 0.5% post RDR, but retaining a guarantee that losses will be capped at 3%.

Existing ISA rules already prevent a stocks and shares ISA manager from acquiring securities which have less than five years to run to redemption, hence the widespread use of terms just exceeding five years for ISA-wrapped structured products.

Bulletin provided by Techlink.

Read more here: http://www.techlink.co.uk/bulletin.asp?ID=99878

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Posted in: IFA News and Commentary,

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

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Posted in: IFA News and Commentary, Morningstar, Quick Tips, Research,