Research houses Standard & Poor’s (S&P) and Morningstar will not follow Lonsec and Zenith’s implementation of a blanket hold assessment on the entire mortgage fund sector.
S&P and Morningstar will continue to examine each mortgage fund individually prior to changing the assessment, even as the number of managers blocking redemptions has increased of late.
One by one, S&P has put most of the 17 mortgage funds it covers on hold.
“We do not support a blanket ban on the entire sector, and have taken a different approach to some research houses in this regard,” S&P director of fund ratings Peter Ward said.
Morningstar responds to each fund on its merits and does not support a blanket approach, Morningstar head of adviser and research Anthony Serhan said.
The firm has already placed mortgage funds from Perpetual, Axa, Australian Unity and Mariner, Colonial First State and ING on hold.
“We placed the funds on hold because they had indicated there were some short-term liquidity issues, and they had to alter the application/redemption process,” Serhan said.
Research house Zenith Investment Partners put a blanket hold recommendation on the sector on October 21. Only a small number of funds are on its recommended list, including the Challenger Howard Mortgage Trust and Australian Unity High Yield Mortgage Trust.
Lonsec general manager of research Grant Kennaway said Lonsec believed a blanket hold rating to be prudent because the Government’s guarantee would cause liquidity, or potential liquidity issues for the products.
“What other research houses do is totally up to them. People are talking about this like it is unique, but my understanding is there was a hold recommendation by other research houses on the long/short sector and other sectors,” Kennaway said.
Research house van Eyk did not return InvestorDaily’s calls before deadline.
