S&P moves to bulk ratings for fixed interest managers

Standard & Poor’s has reviewed 30 Australian-based fixed interest managers and, for the first time, given them simultaneous ratings.

The research firm upgraded only three funds and downgraded 22 out of the 60 funds rated. The upgraded funds were BT’s cash management trust, Legg Mason’s Australian bond trust and AMP’s enhanced yield fund. In addition, BT’s newly rated enhanced cash fund came in with five stars. Previously, S&P rated fixed interest managers independently. The research firm believes that doing them as a whole provides a greater degree of relativity in the ratings outcomes. S&P noted that over the past six months there had been a lot of instability at fixed interest firms. “Unlike most other asset classes, staff stability, especially at senior levels, has been extremely strong for some years among fixed interest managers. Interestingly, over the past six months this relative stability has come to an end, with notable departures.” S&P listed PIMCO’s former head of fixed interest, Kumar Palghat, leaving to form his own Challenger-backed boutique, Ross Gustafson leaving Tyndall, where he was head of fixed interest, the entire fixed interest team of Deutsche being acquired by Aberdeen as part of a bigger deal, departure of key global staff at INVESCO resulting in the Australian head, Lachlan Callender moving overseas, the departure of Vanguard’s head of fixed interest, Matthew McCrum. S&P also noted that the strategy of forming partnerships between Australian and international fixed interest managers did not always work out. BT’s relationship with BlackRock and Perennial’s Western Asset fell over after ownership changes.