Morningstar UK has acquired Old Broad Street Research (OBSR) for £11.95 million, subject to post-closing adjustments, in an all-cash deal that bolsters our research capabilities and supports our strategy of continuing to build our thought leadership in investment research.
Together, Morningstar UK and OBSR investment analysts cover more than 700 funds available for sale in the UK. In addition, Morningstar UK rates more than 600 funds sold throughout Europe and Asia and OBSR analyses a wide range of financial products and tax wrappers, including individual and group pension products, UK onshore and offshore investment bonds, individual and business protection products, and savings products.
The acquisition of one of the most renowned research and consulting firms in the UK not only complements our existing fund research but will also help Morningstar better serve its clients by expanding our investment consulting presence.
Morningstar's qualitative ratings, which were introduced in Europe a little over a year ago, operate on a five-point scale where funds are assigned a rating ranging from Elite at the top end to Impaired at the bottom, based on the analyst’s conviction in the fund’s ability to outperform its peer group over the long term. Our evaluation is based on five key pillars: People, Parent, Process, Performance, and Price.
Similarly, OBSR's own three-point qualitative ratings scale, where funds are assigned an AAA, AA, or A rating, consider criteria such as fund group stability and resources, investment philosophy, resource deployment, investment process, portfolio construction, and management of risk. Both approaches encompass much more than just past performance and there is already a high degree of correlation between the funds that have both an OBSR and Morningstar rating, so we're confident that our shared culture and combined efforts will benefit both retail and institutional clients. Of course, it's business as usual for both Morningstar and OBSR clients--by joining forces, we can now offer our clients broader services from one provider.
"Morningstar is a good cultural fit for OBSR," commented Richard Downs, managing director of OBSR. "The investment and advice world is changing, particularly with the introduction of the Financial Services Authority's Retail Distribution Review (RDR). As part of Morningstar, we will be able to leverage its core skills in research, design, technology, and data to develop a best-in-class solution that builds on our experience in this area.”
As a subsidiary of Morningstar, OBSR will continue to offer its fund rating and consultancy services, with the benefit of access to Morningstar’s 290 researchers and analysts worldwide. The subsidiary will be called "OBSR, a Morningstar company."
