Under the bonnet of fund research agencies: RSMR

RSMR defines itself as an adviser-centric research agency. We agree with that view but also think it has yet to reach its full potential. Established in 2004, RSMR is now the fifth most influential research agency among advisers, according to our report The Influence of Research Agencies.

The proportion of advisers using RSMR has increased from 15 per cent in 2014 to 18 per cent at the end of last year. But that is still a long way from the levels of growth enjoyed by some of its peers.

The good news for the agency is that it has one of the highest proportion of advisers that pay for its services, at 34 per cent of its total users. This represents a share of almost 9 per cent of the market of advisers that pay to access third-party research.

Advisers can access RSMR’s fund ratings for free through its research hub, so those paying are doing so to use the bespoke investment consultancy service RSMR Select or the model portfolio solutions Rfolios.

The FCA and market commentators have expressed concerns about research agencies’ potential conflicts of interest. With this in mind, it is important for them to diversify their income streams with things such as paid-for services and avoid relying wholly on selling marketing licences to fund groups. If not, it is highly unlikely ratings agencies will ever escape the regulator’s spotlight.

Putting the portfolios together

RSMR’s ratings are qualitative and cover most fund types, apart from exchange traded funds and Sicavs, which are not generally popular with advisers. That said, it does provide ratings for investment trusts, and our recent research into these products shows advisers who use them are more likely to also recommend ETFs to clients.

Investment trusts and ETFs share similar barriers to their use but also provide some of the same opportunities. With this in mind, we expect to see more agencies, including RSMR, adding ETFs to their research coverage.

According to our data, users of RSMR’s research are more to likely to favour investment solutions such as multi-asset funds and model portfolios. With this focus in mind, it has recently launched a discretionary fund manager rating.

RSMR’s model portfolios are available on an advisory or discretionary basis. The models consist of seven active and seven passive portfolios (it is neutral on the active versus passive debate), which are aligned to match advisers’ risk profiles for clients.


On top of these, it also provides a model portfolio solution based on socially responsible investing criteria, as well as a list of SRI rated funds established in conjunction with SRI specialist sriServices.

The only other leading research agency offering SRI based ratings is Morningstar, so this feels like a sensible long shot that could pay off if SRI strategies gain momentum in the advice market. Uniquely, the same team responsible for the fund research also runs the model portfolio propositions.

Indeed, where others agencies prefer to establish robust Chinese walls, RSMR sees a competitive advantage with this approach. The thinking is that it makes sense for the team (which has been boosted with two recent hires) to see fund groups and remain close to advisers’ feedback.

Last year, RSMR partnered with the white-labelling platform Hubwise to offer advisory portfolios at a competitive bundled fee of 25 basis points. It is also working on making the portfolios available across other adviser platforms.

With the use of model portfolios still on the rise, a wider presence on platforms should turn out to be critical to the success of RSMR’s Rfolios and the future influence of its research.

Rodolfo Crespo is senior analyst at Platforum

For more information on Platforum’s The Influence of Research Agencies report, contact rodolfo.crespo@Platforum.co.uk