Australia Ratings Pty Ltd (Australia Ratings) has announced the sale of its investment ratings division, Australia Ratings Analytics Pty Ltd (ARA) to Sydney-based Foresight Analytics Pty Ltd (Foresight).

ARA was a division of Australia Ratings that assigned investment ratings to managed funds, separately managed accounts (SMAs) and insurance bonds. The investment ratings staff of ARA have transitioned to Foresight and the investment rating service will continue to operate in a similar manner albeit under its new brand of Foresight Analytics. Foresight Analytics Pty Ltd is managed by Jay Kumar, a former executive of Morningstar Australia.

Australia Ratings will continue to offer credit rating and risk services to the Australian market. Australia Ratings provides credit ratings and assessments on corporate, financial and government entities as well as debt and listed hybrid securities. It will also continue to operate other ancillary services such as assessment of resource companies and credit risk training services.

Australia Ratings’ Managing Director, Chris Dalton, said “We commenced the ARA business to provide investment ratings of funds, SMAs, and investment bonds to financial planners and wealth advisory groups. Having established a successful presence in the research market, we believe the transfer of the business to Foresight will allow it to accelerate its growth trajectory”.

The focus of Australia Ratings will be on credit ratings and related services, which are valued by investors and other market participants to help them understand the features and quality of a range of debt products. “Investors will also continue to benefit from Australia Ratings’ unique product complexity indicator, which gives investors a clear and simple guide to the complexity of the security, complementing our credit ratings”, Mr. Dalton added.

Australia Ratings is one of six credit rating agencies that holds an Australian Financial Services Licence (AFSL). It is the only Australian-owned credit rating agency that holds a retail AFSL. As such, Australia Ratings is the only ratings agency in Australia licensed to assign credit ratings to debt securities and products offered to retail investors in Australia.

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A Product Complexity Indicator of ‘GREEN’ has also been assigned to designate the view that the Fund is a SIMPLE financial product, indicating that the performance is expected to move very closely in line with the corresponding market sector. This Fund is available to both retail and wholesale investors.

A STRONG investment rating indicates a strong conviction that the Fund can deliver a risk-adjusted return in line with the Fund’s investment objective.

The Fund is managed by Blackmore Capital (Manager), a Melbourne-based, long-only, Australian Equity boutique asset management business. The Manager seeks to generate long-term capital appreciation by investing in Australian listed equities; the aim is to do so with lower volatility and greater downside protection relative to the S&P/ASX 200 Accumulation Index benchmark. Blackmore Capital employ a benchmark unaware, high conviction approach that is based on comprehensive fundamental company and industry research; with the primary aim of the strategy being to identify and allocate capital to high quality stocks that are reasonably valued.

Since its inception, the Fund has outperformed the index with less volatility.

Australia Ratings’ analyst, Dragana Timotijevic, says “overall, we view the investment strategy as sound and aligned with the Manager’s objectives, resources, and competencies”. She added, “the rating also indicates the high level of confidence Australia Ratings has that the Fund will continue to deliver a strong risk-adjusted return”.

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A Product Complexity Indicator of ‘Yellow’ has also been assigned to designate the view that the Fund is a complex financial product, indicating that the underlying assets require specialist investment skills to acquire and to monitor. This Trust is available to wholesale investors only.

A rating of Superior is the highest rating on the investment rating scale used by Australia Ratings. A Superior investment rating indicates the highest level of confidence that the Trust can deliver a risk-adjusted return in line with its investment objectives.

The Australian Eagle Trust is managed by Australian Eagle Asset Management P/L, a Sydney-based investment management business, whose structure enables equity participation for team members. The investment philosophy, investment strategy, investment process, and risk management elements of the company’s activities are well established.

Since its inception in 2016 (launched as a retail fund in April 2019), the Trust has focused on investment in Australian equity using a combination of long-short, high alpha: growth, bottom-up, medium capitalisation, and high-conviction investment styles.

Australia Ratings’ analyst, Maggie Callinan, says “the rating reflects the experience and credentials of Australian Eagle’s stable investment team, and confidence in their ability to effectively implement a robust and disciplined investment process”. She added “the rating also indicates the confidence of Australia Ratings that the Trust will continue to deliver a strong risk-adjusted return”. Sean Sequeira, Chief Investment Officer of Australian Eagle, commented “we appreciate the confidence Australia Ratings have shown in our investment team and process, and we look forward to continuing to implement it for the benefit of our clients in the future.”

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