Introducing the Morningstar Awards 2013
Christine St Anne  |  07/02/2013Text size  Decrease  Increase  |  
Christine St Anne: It's certainly awards season with the Oscars coming up. But Morningstar also has its awards for the investment management industry. Today, I'm joined by Tim Murphy to give us a little insight into the Morningstar Awards 2013.Tim, welcome.

Tim Murphy: Thanks, Christine.

St Anne: Tim, what sort of award categories do we have?

Murphy: So there's a range of awards. The bulk of the awards are in individual asset classes. So, large-cap Australian equities, fixed interest, listed property, multi-sector. So, we look at range of factors within each of those asset classes. But then we have two awards that are slightly different to that.
The first of which is the Emerging Manager of the Year award, where we look at capabilities or funds that are new; less than three years old that we think have a strong chance of becoming future good performers and future winners of individual asset class categories. And if you look through the finalists for our awards, you see there're actually a number of former winners and finalists of the Emerging Manager of the Year award; so we think it's quite a good sign of up and comers to keep an eye on.

And then finally, we have our overall Fund Manager of the Year, who is the manager that has demonstrated the best performance across a number of capabilities rather than just any one particular asset class; so the best sort of overall all-rounder, if you like.

St Anne: Can you give us further insights into the processes behind the nominations?

Murphy: Sure. So, while that's an annual award, we look at more than just annual performance for the last 12 months. Clearly, the fund manager needs to have done well in the last year, but equally too, we like longevity for these things. So, there's three key criteria we look at is obviously performance last year.

Secondly, performance over the longer term as well; so not only has the manager done well last year, but have they done well consistently for clients over a long period of time. And thirdly, we factor in the Morningstar research team's analyst writing into the picture as well. So, we want to be focusing on managers who have done well in the past, but who also we think have a good chance of continuing to perform well into the future. So, a combination of those three factors within each of the asset class and overall categories determines the winner there.

The one exception to that is the Emerging Manager of the Year Award. Obviously, given that it is a bunch of managers that are newer to market there tends to be a more qualitative discussion amongst the Morningstar fund research team based on the managers that we've seen that are fairly new or throw around some ideas and then vote on those accordingly to determine first of all the finalists and then the ultimate winner.

St. Anne: Tim, did you pick up any trends when making the nomination list?

Murphy: So, it really depend on the asset classes. So, I think, there's a few managers nominated the sheet that we haven't seen for quite a few years. There is a couple of new ones and additionally there is a couple that have been consistently up there in the last couple of years as well. So, it's hard to define a trend across the board because it really does vary depending on the particular award or asset class and what's going on at that level. So, a combination of the old, the new and the consistent through time, a combination of boutiques and institutional names, so a good spread way to think across the various categories.

St. Anne: It's been a few challenging years for the managed funds industry. Tim, why do you think investors should keep their faith in professional managers?

Murphy: Well, I think professional managers can add a lot of value and certainly the (funnel through) awards are good examples of that in all cases. People haven't been putting money into the market in recent years because there has been a bit of fear out there. Term deposit, cash rates have been quite high. So, it's been easy to stay in the safe option and getting 5 per cent, 6 per cent in terms deposits. But going forward, interest rates have come down quite materially.

Investors are starting to realise that, hey, market after last year, equity markets up around 20 per cent, listed property is up 30 per cent, interest rates – cash rates now sort of down around the 3 per cent mark, getting more into markets and then having someone professionally manage that in a managed fund context can certainly add a lot of value.

St. Anne: Tim, thanks much for your time today.

Murphy: Thanks Christine.

Video Archive...

Tailwinds blow for Europe and Japan
01/12/2015  Given their solid forward earnings growth prospects and policy tailwinds, European and Japanese equities look favourable, BlackRock's Stephen Miller says.
The importance of valuation
25/11/2015  Valuation is critical as it drives both risk and return, and buying the wrong asset at the wrong time can have devastating consequences.
2016 another difficult year for emerging markets
24/11/2015  Emerging markets veteran Hugh Young of Aberdeen admits that 2015 has been hard for investors but says stocks are cheap and there are gains to made over the long term.
Emerging markets: down but not out
18/11/2015  Emerging economies have struggled in recent years, but their increased productivity, stronger population growth, and rising middle classes represent an important growth opportunity for the future.
Characteristics of quality investments
17/11/2015  While markets may be constantly changing the traits of good-quality companies remain the same, Celeste Funds Management's Frank Villante says.
Moats, stewardship and managing volatility
12/11/2015  Morningstar's Mathew Hodge looks at how moat ratings complement an income strategy and can steer investors away from a range of problems.
Hong Kong stocks better value than Chinese
10/11/2015  It is important to be selective when investing in China, says Aberdeen's Nicholas Yeo, as volatility is here to stay.
Biotechs under the microscope
05/11/2015  Morningstar's Chris Kallos explains why all biotech companies are not the same and how this can affect the number of risks a certain company can carry.
China slowdown won't hurt Asian equities
03/11/2015  Chinese GDP growth may have slowed but the fundamentals are still supportive of equity markets, says Barings head of multi-asset Khiem Do.
Health stocks in the green zone
29/10/2015  Morningstar's Peter Warnes looks at an area of the market where the recent volatility has created opportunities, while also reiterating the importance of moats and stewardship.
Investing in a time of disruption
26/10/2015  While economies grapple with demographics, price distortions and deleveraging, a fourth D confronts investors, says Fidelity’s Kate Howitt.
US won't catch recession off China
22/10/2015  When you have slow underlying growth, it's sometimes tough to tell the difference between a slowdown and a recession, says BlackRock's Tony DeSpirito
What is an economic moat?
19/10/2015  Businesses with a Morningstar economic moat rating are positioned to generate excess returns over an extended period.
Keeping a long-term focus
12/10/2015  Superannuation balances still grew despite extreme events such as the global financial crisis, says Morningstar’s Anthony Serhan.
The problem with China
07/10/2015  China’s stock market crash will spur an internal debate in the country about the need for more market-based reforms, says author and former banker Satyajit Das.
Best ideas in credit
06/10/2015  Morningstar’s John Likos discusses what types of securities are included in the Moat-Focused Credit Best Ideas list.
Pitfalls of investing for retirement
30/09/2015  Bad behaviour before and in retirement can take a major hit to your savings. We outline the pitfalls to avoid if you want to maximise your pension pot.
Outlook for rates and the dollar
28/09/2015  Nikko Asset Management currency strategist Roger Bridges gives his view on China's recent move with the yuan, as well as the outlook for interest rates and the Australian dollar.
The new mediocre and growth
25/09/2015  Housing affordability challenges and shorter government terms will be the norm under the "new mediocre" of growth, says author Satyajit Das.
A look at global valuations
22/09/2015  Magellan’s Hamish Douglass talks about where he is finding value across the globe and why his fund has reduced its exposure to emerging markets