Bondwatch Launch Will Help Investors Assess Risk
AUCKLAND, 15 May 2002 - New Zealand-owned financial services and research organisation Grosvenor Group has launched a Bondwatch service to help investors and financial advisers assess the risk and relative value of bonds and other fixed interest securities.
The independent service offers an expert opinion on the risk and relative value of bonds based on information contained in investment statements and prospectuses. These are the legal minimum requirements for information that has to be made available to the public for fixed interest securities, debentures and bonds.
Grosvenor Managing Director and Chief Executive, Allan Yeo, said Bondwatch ratings will help investors manage their exposure to the ever-expanding bond and fixed interest market.
"Bondwatch ratings are not about providing a pass or fail assessment, but rather helping investors and financial advisers appraise what investments are appropriate for an individual's risk appetite," Mr Yeo said.
"The objective is for Bondwatch to reflect the opinion of a prudent investor with the time and inclination to carry out their own research," he said.
The system assesses 47 different criteria for bond issues, such as the history and ownership of issuers, governance and management structures, as well as balance sheet and financial analysis. The ratings table contains eight levels, with each level indicating a different tier of assessed risk.
Mr Yeo said he expects the service will be welcomed and valued by investors, particularly small investors, as it fills a yawning gap for independent and expert assessment of the bond and fixed-interest market.
"A lack of information about bonds is causing inefficiencies in the market. Investors need to understand that higher risk should be rewarded with higher returns," he said.
Grosvenor Chief Investment Officer David Beattie noted that recent problems in the fixed interest and bond market, like the default on payments of Metropolis bonds, highlighted the need for investors to fully understand risk.
"Our concern is that firstly, investments may not be appropriate for the underlying risk appetite of an individual investor, and reaching an informed view of the risks is important. Secondly, returns for investments with similar risk should be aligned," Mr Beattie said.
"The safety of a bond investment is entirely dependent on the ability of the debtor to meet their obligations. It is the assessment of that risk that investors need to consider, and Bondwatch assists that process," Mr Beattie said.
Commenting on Grosvenor's ability to compile the rating, General Manager Mark Tume noted the group is an experienced and independent financial services and research organisation with substantial research expertise on financial products, including bond and fixed-interest products.
The New Zealand group is privately owned and provides financial advisers and intermediaries with research, administration, monitoring and reporting systems using leading technology and a team of recognised experts.
The Group has 23 employees and funds under administration of approximately $400 million.
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