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Australian Equities Sector Wrap 2020

Aman Ramrakha  |  27 Apr 2020Text size  Decrease  Increase  |  
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Executive summary

Morningstar conducted qualitative research assessments on 89 Australian large-cap equities strategies and 36 Australian small-cap strategies during its 2019 fund manager reviews. The 125 Australian equity strategies covered by Morningstar included 99 unlisted trusts, 17 exchange-traded funds, and nine listed investment companies. The  Australian Equities Sector Wrap provides both a summary of the Morningstar Analyst Ratings and an overview of our major observations. This was the last annual review under the current rating system; the next review will be under Morningstar's enhanced ratings system, which was introduced on 31 Oct 2019.

After completion of the Australian equities fund manager annual reviews, four unlisted funds achieved rating upgrades owing to our increased conviction in the investment team, research capability, and investment process. We downgraded 13 unlisted funds and listed investment companies based on a mixture of investment-team upheaval, reduced confidence in the portfolio manager, or diminished conviction in the investment process or structure.

Morningstar’s manager research analysts are the primary decision-makers in determining the strategies for which we will produce qualitative research ratings and reports. We look for the best strategies in the market for our clients, basing our decision on investment merit and demand. Positively, we initiated coverage of four unlisted funds in the last annual review cycle.

Morningstar Medallists are the outstanding Australian equities fund manager strategies for 2019, being awarded a Morningstar Analyst Rating of Gold, Silver, or Bronze. In 2019, 66% of Australian equity fund managers reviewed by Morningstar achieved a Medallist rating.

We assess how the large-cap active managers have fared, during the buoyant market of 2019 and distressed market of early 2020, in the continuing struggle for dominance between active and passive managers.

We also examine the liquidity in small-cap stocks, analysing portfolio days-to-trade for the active managers in Morningstar's coverage universe.

We conclude with our usual overview of the Basic Data, Portfolio Characteristics, and Style Box breakdowns.

 Download the full report (PDF)

 

is a Morningstar director of manager research ratings, APAC

Any Morningstar ratings/recommendations contained in this report are based on the full research report available from Morningstar.

© 2020 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782. The article is current as at date of publication.

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