What has Interactive Investor done with Morning Star?
The popular investment and trading platform, which is characterised by the monthly subscription that its members pay, has decided to outsource the collation, production and maintenance of Its pre-selected portfolios, Super 60 and Ace 40.
II has picked Morningstar to take over these day to day activities.
Morningstar is a highly regarded and independent research house that has grown from just a handful of analysts in 1984, and into an organisation that employs 8,500 staff, in 29 countries and which has data on more than 600,000 investments.
Wha it means for Interactive Investor clients
II has decided to outsource to Morningstar partly to free up its own research team for other projects and Morningstar will follow II’s investment methodology.
However, by bringing in a third party, II will also make the fund selection process independent and will avoid potential conflicts of interest that could occur under its new owner Abrdn the new name for Aberdeen Standard Life.
The use of an external manager may also widen the portfolio selections and remove any subconscious bias there may have been under the in-house research team.
Back in early December Investment Week found that funds managed by Baillie Gifford and Vanguard dominated Interactive Investors best buy lists though, of course, II’s clients make the final decision to buy or sell and investment as II operates on an execution only basis.
II CEO Richard Wilson said that it was time for the platform to evolve adding:
“That means outsourcing the day-to-day running of these recommendations but owning the methodology and intellectual rigour. We do not want to mark our own homework. There is 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.”
Morningstar’s Gavin Corr, the Co-Global Head of Manager selection said that:
“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”
“Morningstar’s London-based manager selection team will provide ii with independent fund manager and equity research, and a suite of multi-asset model portfolios that includes ESG investment options.”
What does this mean for II Clients
This is a brave and forward-thinking move by Richard Wilson and his colleagues at II, and it’s one that could be a win-win strategy for both the firm and its client base, by maintaining the independence and impartially of the fund selection process, and at the same getting new inputs and ideas from both Morningstar and II’s newly liberated research team.