LONDON — Standard & Poor's, London, will launch a money manager appraisal service later this year for U.K. institutional investors, according to Aidan O'Mahony, managing director, pension services.
The service will be a new competitor in the U.K.'s tightly controlled investment consulting market. And while money managers will have to pay for the service, the appraisals will enable them to familiarize plan sponsors with new investment strategies that consultants may have disregarded for lack of track record or patchy performance.
Reports will include a credit assessment of a firm's financial strength; analysis of its investment and operational infrastructure, including reporting and compliance; and analysis of its investment performance by asset class.
The service is unlikely to compete directly with investment consultants that provide advice on asset allocation and make manager recommendations.
"Our job is not to offer short lists or advice," he said.
S&P already provides ratings of retail funds globally, but the focus on institutional money managers is part of a new range of services for pension plans trustees and sponsors that the company is initially launching in the United Kingdom.
S&P is launching the new service in the United Kingdom because recent changes to pension legislation has meant trustees are under greater pressure to make sure their pension plans are adequately funded. Trustees are now encouraged to seek a broader range of advice than they had before, and industry observers have identified a need for greater competition in money manager research and selection.
Plan trustees will be able to access S&P's database of money managers free of charge for use in manager searches, said Mr. O'Mahony, but money managers will pay to be rated.
Managers will pay for a "house assessment," which will include a performance valuation for one asset class. Additional asset classes will be included at an extra cost. The amount of the fees hasn't yet been determined.
S&P will approach money management firms that run assets for U.K. pension plans with a prototype rating model during the summer. The service will be launched in the United Kingdom and "rolled out globally at a later stage," he said.