Morningstar
RecommendedMorningstar AwardsWhats New IconETFs Whats New IconIncome Week Whats New IconThematic Investing Whats New IconSign Up to Our Newsletters Open Window Icon
Fund Research & Insights

Fund Times: 14 – 18 January

Scot Eq impose property fund redemption delays; Lyxor launch four new ETFs; New Star warns on 2008 profits; and the IMA Updates UK Equity Income and UK Equity Bond sector definitions.

Tom Whitelaw 18 January, 2008 | 1:51PM
Facebook Twitter LinkedIn
Font-Size
Scottish Equitable Impose Property Fund Redemption Delays
 In another example of the questionable wisdom of allowing funds that typically provide daily liquidity to own primarily illiquid assets, Scot Eq is the latest investment manager to impose redemption delays on their property funds. As with other providers, outflows left the fund with low cash levels, raising the spectre of forced property sales in the event of continued redemptions. The restrictions are similar to those imposed by Friends provident last month (see Redemption Delays Imposed at Friends Provident) and mean that if you are invested in the

Scottish Equitable Property fund, the Select Reserve fund or the Select Distribution fund you will not be able to switch from, surrender (cash in) or transfer out of them for up to 12 months. For more information on the woes of property companies in recent months please note the following article Property Showing Its Risks.

Lyxor Launch Four New ETFs
 Lyxor Asset Management have launched four new ETFs that will track FTSE/RAFI indexes linked to the US, Europe, Eurozone, and Japan. The indexes are based on a methodology from Bob Arnott's Research Affiliates and offer an alternative to traditional market-cap weighted benchmarks by weighting companies according their fundamental traits. Unlike traditional market-cap weighted indexes, they are biased toward somewhat smaller, value-oriented stocks which are coming off an extended rally. Therefore, historical returns for the RAFI indexes look good, but there is no guarantee that such outperformance will continue. The Lyxor FTSE RAFI ETFs will charge a management fee of 0.75%. For more information on ETF investing, please see our new ETF Centre.

New Star Warns on 2008 Profits
 New Star Asset Management shares were down nearly 40% in early trading on Friday after the fund management group announced that profit for the year to 31 December 2007 will be in line with analysts' forecasts, but warned that the figure for 2008 looks set to be 'significantly lower' than expected. New Star said most of its UK and European equity mutual funds performed 'significantly' worse than its rivals' in the second half of last year, blaming their higher exposure to the credit crunch, rising energy and commodity prices, as well as a weaker UK commercial property market. Over the last year their UK Property fund fell almost 20%, while New Star UK Growth is down 22.47%, and New Star UK Special Situations has lost 24.5% (prompting the proposed merger with UK Alpha as noted in last weeks Fund Times.), compared to the FTSE All Shares losses of just 3.47% over the same period.

IMA Updates UK Equity Income and UK Equity Bond Sector Definitions
The IMA have recently reviewed their UK Equity Income and UK Equity & Bond sectors, and as a result have decided to update the sectors definitions in order to reflect the new methodology for calculating fund yields. The new definitions for the UK Equity Income and UK Equity and Bond Income sectors are as follows:

UK Equity Income "Funds which invest at least 80% in UK equities and which aim to achieve a yield on the distributable income in excess of 110% of the FTSE All Share yield."

UK Equity and Bond Income "Funds which invest at least 80% of their assets in the UK, between 20% and 80% in UK fixed interest securities and between 20% and 80% in UK equities. These funds aim to have a yield in excess of 120% of the FTSE All Share Index."

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn
Font-Size

About Author

Tom Whitelaw  

© Copyright 2024 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Modern Slavery Statement        Cookie Settings        Disclosures

The Morningstar Star Rating for Stocks is assigned based on an analyst's estimate of a stocks fair value. It is projection/opinion and not a statement of fact. Morningstar assigns star ratings based on an analyst’s estimate of a stock's fair value. Four components drive the Star Rating: (1) our assessment of the firm’s economic moat, (2) our estimate of the stock’s fair value, (3) our uncertainty around that fair value estimate and (4) the current market price. This process culminates in a single-point star rating that is updated daily. A 5-star represents a belief that the stock is a good value at its current price; a 1-star stock isn't. If our base-case assumptions are true the market price will converge on our fair value estimate over time, generally within three years. Investments in securities are subject to market and other risks. Past performance of a security may or may not be sustained in future and is no indication of future performance. For detail information about the Morningstar Star Rating for Stocks, please visit here

Quantitative Fair Value Estimate represents Morningstar’s estimate of the per share dollar amount that a company’s equity is worth today. The Quantitative Fair Value Estimate is based on a statistical model derived from the Fair Value Estimate Morningstar’s equity analysts assign to companies which includes a financial forecast of the company. The Quantitative Fair Value Estimate is calculated daily. It is a projection/opinion and not a statement of fact. Investments in securities are subject to market and other risks. Past performance of a security may or may not be sustained in future and is no indication of future performance. For detail information about the Quantiative Fair Value Estimate, please visit here

The Morningstar Medalist Rating is the summary expression of Morningstar’s forward-looking analysis of investment strategies as offered via specific vehicles using a rating scale of Gold, Silver, Bronze, Neutral, and Negative. The Medalist Ratings indicate which investments Morningstar believes are likely to outperform a relevant index or peer group average on a risk-adjusted basis over time. Investment products are evaluated on three key pillars (People, Parent, and Process) which, when coupled with a fee assessment, forms the basis for Morningstar’s conviction in those products’ investment merits and determines the Medalist Rating they’re assigned. Pillar ratings take the form of Low, Below Average, Average, Above Average, and High. Pillars may be evaluated via an analyst’s qualitative assessment (either directly to a vehicle the analyst covers or indirectly when the pillar ratings of a covered vehicle are mapped to a related uncovered vehicle) or using algorithmic techniques. Vehicles are sorted by their expected performance into rating groups defined by their Morningstar Category and their active or passive status. When analysts directly cover a vehicle, they assign the three pillar ratings based on their qualitative assessment, subject to the oversight of the Analyst Rating Committee, and monitor and reevaluate them at least every 14 months. When the vehicles are covered either indirectly by analysts or by algorithm, the ratings are assigned monthly. For more detailed information about these ratings, including their methodology, please go to here

The Morningstar Medalist Ratings are not statements of fact, nor are they credit or risk ratings. The Morningstar Medalist Rating (i) should not be used as the sole basis in evaluating an investment product, (ii) involves unknown risks and uncertainties which may cause expectations not to occur or to differ significantly from what was expected, (iii) are not guaranteed to be based on complete or accurate assumptions or models when determined algorithmically, (iv) involve the risk that the return target will not be met due to such things as unforeseen changes in changes in management, technology, economic development, interest rate development, operating and/or material costs, competitive pressure, supervisory law, exchange rate, tax rates, exchange rate changes, and/or changes in political and social conditions, and (v) should not be considered an offer or solicitation to buy or sell the investment product. A change in the fundamental factors underlying the Morningstar Medalist Rating can mean that the rating is subsequently no longer accurate.

For information on the historical Morningstar Medalist Rating for any managed investment Morningstar covers, please contact your local Morningstar office.

For more detailed information about conflicts of interest, including EU MAR disclosures, please see the “Morningstar Medalist Rating Analyst Conflict of Interest & Other Disclosures for EMEA”here

Select Your Site Edition To make sure the site is relevant to you, we need to know if you’re an individual investor or a financial professional.