Interactive Investor

Day care of ii Super 60 and ACE 40 outsourced to Morningstar

17th January 2022 07:47

Jemma Jackson from interactive investor

Time to evolve, says interactive investor, over rated lists decision.

  • Move frees up analyst team to increase funds, investment trust and ETF coverage and drive retail investor campaigns
  • The lists are still ii’s babies – ii will own the methodology, and ensure Morningstar are faithful to it

As interactive investor’s flagship rated list, Super 60, turns three years old, and its ethical sister list, ACE 40, turns two, the UK’s second-largest DIY investment platform, is evolving its rated products, handing over the day care to Morningstar’s Manager Selection Services Group.

The collation, production and maintenance of the platform’s select lists (Super 60, ACE 40, Quick-start Funds, Investment Pathways) and at a later stage, its Model Portfolios, will be outsourced to funds ratings agency Morningstar, further cementing ii’s unconflicted business model. 

The move frees up ii’s research team, led by Moira O’Neill, Head of Personal Finance, to carry out wider research, with a view to both challenging and championing the industry.

Head of Funds Research Dzmitry Lipski will oversee the Morningstar relationship, adding challenge and ensuring Morningstar follows ii’s processes and methodology. As and when ii’s methodology evolves, Morningstar may add external challenge, and it is important they are comfortable with ii’s intellectual framework.

The rated list and model portfolio methodology will continue to be owned by ii, and the recommendations will continue to be made from the whole funds, investment trust and ETF universe.

Richard Wilson, CEO, interactive investor, says: “Rated lists are an important starting point for private investors. But it’s time to evolve. That means outsourcing the day to day running of these recommendations but owning the methodology and intellectual rigour. We don’t want to mark our own homework. There’s a big funds universe out there, and it’s time to broaden our scope.

“We want to free up our analyst team to look beyond our rated lists, with a view to adding more challenge and innovation in funds research. We are immensely proud of the work we have done to develop the methodology of our rated lists and we are delighted to partner with Morningstar.”

Moira O’Neill, Head of Personal Finance, interactive investor, says: “Three years on since we launched Super 60, and two years on from ACE 40, it’s not easy letting go. But it’s the right time.

“We know the methodology works well. We think our home-grown ‘Avoids Considers and Embraces’ ACE categories are as useful today as when we first launched them to help investors interested in ethical, ESG and sustainable investing. We haven’t seen them bettered, but we have seen a lot of industry consultations on definitions in this space come and go in the meantime. These consultations might deliver in the long-term, but add little help to investors in the here and now.

“We know our Super 60 and ACE 40 rated lists have matured and are in good shape, and we are ready to hand them over to Morningstar. But they are still our babies – and we’ll be ensuring Morningstar follow our process and methodology, adding challenge where necessary.”

Good governance of ii’s rated products will continue to be front and centre. ii’s Investment Governance Committee, a standing committee of the Board, will continue to be where the buck ultimately stops.

Gavin Corr, Global Head of Morningstar’s Manager Selection Services, says: “We are delighted to be partnering with interactive investor, a leader in the growing direct to consumer investment marketplace. Morningstar’s fund research and ratings are undertaken and compiled with complete independence and without any financial inducement from the asset managers it may rate.  This independent business model ensures that we can partner with ii to deliver to their clients the best possible fund research and ideas, providing transparent research, selections, and rationales, whilst removing any potential conflict of interest with those asset managers.

“The investment landscape is changing rapidly with investors looking increasingly for greater personalisation and relevance in their investments, especially around ESG and thematic investing. We are looking forward to helping ii and their customers by using our data, research and ratings to help empower their clients by providing content that informs, educates, and helps them with their investment decisions. Our London-based manager selection team will leverage Morningstar’s extensive global research capabilities to provide ii with independent fund manager and equity research, and a suite of multi-asset model portfolios in a holistic solution that encompasses both mainstream and ESG investment options.”

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