Standard & Poor’s Investment Services

Don Gunawan
Sales Associate, Client Relationship Group

February 2009
Capstone Financial Planning Pty Limited
Professional Development Day

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© 2008 Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. All rights reserved.
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2.
 Agenda
1. About Standard & Poor’s

2. Mission Statement & Value Proposition

3. S&P Fund Ratings & Research

4. S&P Fund Services Development

5. Q&A

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3.
 About Standard & Poor’s
Since 1860, S&P has been providing independent & objective financial
research worldwide.

Part of The McGraw-Hill Companies Inc.

 A leading global information services provider
 380 offices in 40 countries
 NYSE listed company

Standard & Poor’s

 Operating in 21 countries
 World’s leading credit rating organisation
 S&P indices widely used globally
 S&P Fund Services positioned as major strategic objective

Standard & Poor’s in Australia

 16 years in Australia
 150+ staff based in Melbourne & Sydney

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4.
 Mission Statement & Value Proposition

S&P MISSION STATEMENT

To be the definitive source of transparent benchmarks, independent

research, quality data, and in-depth analytics demanded by financial
professionals

S&P FUND SERVICES VALUE PROPOSITION

An independent, scalable and deep domain knowledge based suite of

wealth management focused capabilities to maximise funds under
advice, mitigate compliance and advice risk, optimise alpha
generation, and reduce cost.

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5.
 Fund Ratings & Research
An S&P fund rating is a forward-looking qualitative assessment of a
manager’s ability to consistently generate superior risk-adjusted fund
returns, net of fees, relative to relevant investment objectives & peers

Independence: Don’t manage money or owned by a bank, highest

standards of compliance
IIn
nde pe
nde nc
e
People: One of the largest team of researchers in Australia. Client
Peopl
e focused
Analy
tical r
i gor Analytical Rigor: 3,000 qualitative fund ratings coverage. Timely, opinion
Flexib rich research – consistent & robust rating methodology.
le
Innov & Global resources.
ative

Globa
l bran
d Flexible & Innovative: Modulised client focused services. Out of Cycle
ratings. New website. ETF, SMA ratings development.

Global Brand: McGraw Hill Harmonisation & Support. Global resources.

Economies of Scale.

Distribution
S&P Fund Management Ratings are distributed to over 100 clients in Australia, including over
8,000 financial advisors for which S&P acts as a primary source of managed funds research –
via dealer group and platforms.

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6.
 S&P Fund Services Team

MARK HOVEN

Head of Fund Services

JOSE ORDONEZ

Director
Client Relationship
Group
LEANNE MILTON PAUL O’CONNOR JEFF MITCHELL RENEE TANNOUS

Head of Research Wealth Management Wealth Management Head of Operations

Services Services

FUND SERVICES
Brendan Chong
Don Gunawan

FIRMS
EQUITIES ALTERNATIVES STRUCTURED LISTED & FIXED OUT OF CYCLE Damien Jacotine
& STRUCTURES PRODUCTS DIRECT INCOME & Zoe King
Tess Denton
PROPERTY MULTI-SECTOR
Leader Simaputang
Fiona Fu
Tara Bell Simon Scott Rodney Lay Peter Ward David Erdonmez TBA
Jonathan Costello
David Wyse
Stella Norberti
TBA - 1

Simone Arblaster TBA – Analyst 1 Kelly Napier Anthony James Gunn

Justine Gorman Nathan Bode Karaminas Christian Baylis
Leanne Fook TBA – Analyst 2 Tom Mills
Shane Brereton
Sheela Veerappan

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7.
 Fund Rating Peer Groups

Asset Class/Sector

                         

Alternative Alternative
  Equities   Fixed Income   Property       Multi-sector
Strategies Assets

                       

  Large Cap   Credit   Listed   Single Strategy   Commodities   Conservative

Group

                       
Process

  Small Cap   High Yield   Direct   Multi-Strategy   Private Equity   Balanced

Peer

                       
Ratings

Emerging
    Fixed Interest   Diversified   Long/Short   Infrastructure   Growth
Ratings

Markets

                       

  Regional   Mortgages           Currency    

                       

  Specialist   Diversified                

                       

  Diversified                    

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8.
 Fund Ratings Schedule
SECTOR/PEER GROUP JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Australian Fixed Interest                        

Mortgages                        

International Equities - Regional                        

International Equities - EMA                        

Multi-Sector                        

Australian Equities - Small Cap                        

International Fixed Interest                        

International Equities
Large/Small                        

International Property - Listed                        

International Equities -
Infrastructure                        

Alternative Assets                        

Alternative Strategies                        

Australian Equities - Large Cap                        

Alternatives - Long/Short                        

Australian Property - Listed                        

Out of Cycle Ratings                        

Direct Property                        

Structured Products                        

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9.
 Key Areas assessed – Fund Ratings

 Experience  Skill/Flair
Investment  Size/Use of Resources  Stability/Dynamics
Team  Track Record

 Track Record  Organisation Structure

Business  Investor Alignment  Financial Strength
Management  Remuneration Structure

 Philosphy  Clarity
Investment  Implementation  Conviction
Process  Investment Constraints

 Objectives
 Capacity
Fund Issues  Fees
 Other Structural Features

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10.
 Key Areas assessed – Structured Products

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11.
 Ratings Process

Contracting Report Preparation

Prior Background Audit Ratings Committee

Release of Rating &

Face to Face Interviews
Report

Ongoing Product
Product Analysis
Surveillance

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12.
 STAR Ratings

Very High conviction that the manager will consistently generate risk-adjusted
fund returns in excess of relevant investment objectives and relative to peers.
High conviction that the manager will consistently generate risk-adjusted fund
returns in excess of relevant investment objectives and relative to peers.
Conviction that the manager can generate risk-adjusted fund returns in line with
relevant investment objectives and relative to peers.
Conviction that the manager will not generate risk-adjusted fund returns in line
with relevant investment objectives and relative to peers.
High conviction that the manager will not generate risk-adjusted fund returns in
line with relevant investment objectives and relative to peers.
Issues potentially affecting the management of the fund have emerged, and the
ON HOLD fund rating is temporarily suspended, pending clarification
A manager with significant issues that have the potential to adversely impact
SELL performance. Existing investors should consider obtaining advice regarding
switching or redemption.

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13.
 Structured Product Ratings

Very Strong rating to the product based on its conviction that it can meet its
objectives over the stated time period. The product has scored exceptionally in
a number of categories but may not be suitable for all investors.
Strong rating to the product based on its conviction that it can meet its
objectives over the stated time period. The product has scored strongly in a
number of categories but may not be suitable for all investors.
Sound rating to the product based on its conviction that it can meets its
objectives over the stated time period. The product has scored soundly a
number of categories but may not be suitable for all investors.
Pass rating to the product based on its conviction that it can meets its objectives
over the stated time period. The product has passed a number of categories but
may not be suitable for all investors.
Weak rating to the product based on its conviction that it cannot meet its
objectives over the stated time period. The product has scored weakly in a
number of categories and may not be suitable for most investors.
On Hold designation is a suspension of a rating pending further analysis of a
material change in the characteristics of a product.

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14.
 S&P Research Reports—Product

Premium Rated Direct Property Structured Rated Fund

Fund Report Fund Report Product Report
• Comprehensive • Comprehensive Report • 1-page report
qualitative analysis qualitative analysis • Comprehensive containing fund
of investment qualitative analysis rating, rating
of investment
capability and of underlying justification, and
capability
property portfolio assets, product quantitative data
• Updated annually • structure and
Updated each • Dynamically
or when material ratings cycle or investor suitability generated with
changes occur when material current
• Updated annually
changes occur for open actively performance data
managed products • Used for insertion
or when material into statements of
changes occur advice

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15.
 S&P Research Reports—Thematic

Sector Report Commentaries Monthly Reports

• Concise summary of • Thematic articles on • Market & tactical
key findings from important investment asset allocation
rating peer reviews or market issues reports
• Lists of all peer • Produced on an • Asset class
group ratings occasional basis commentary
throughout year
(current/historical)
• Used to stay abreast
of important sectoral
developments

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16.
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17.