As in previous years, all rankings and other findings in this survey are based on a poll by questionnaire of the opinions of the SA brokerage firms' domestic institutional clients.
Many of the broking firms produce investment research, or offer other services such as dealing, for foreign clients. However, foreign institutional clients' opinions were not considered for this survey, except where they might have been managing assets in SA.
The structure of the survey is devised largely by the FM. Markinor, an independent market research firm, oversees the processing of the data and compilation of the results. Spreadsheets were designed and run by Vickie Watt of Training Services & Solutions. The SA Bureau of Standards did an independent audit.
Questionnaires were distributed, in an electronic form, in March and completed versions were returned by late April. The name of the institution was embedded in each page of the questionnaire, and respondents were asked to return one co-ordinated response directly to Markinor.
This year questionnaires were sent to 30 financial institutions and asset managers, including life assurers, retirement fund managers, large pension funds, private client investment managers and some hedge funds. The return rate for the completed questionnaires was 100%, the same as last year.
Based on data given in the returned questionnaires, organisations that participated in this year's survey manage domestic assets totalling R2 764bn, and their personnel includes 233 fund managers and 248 buy-side analysts.
"The key brokerage functions of research, dealing and administration are treated separately. There is no overall ranking combining these" |
Before compiling the questionnaires, the FM asked JSE member firms known to be involved in institutional research for names of their investment analysts and the sectors covered by those analysts in the past year. The analysts' names were then included, alongside their firms' names, in each research sector in the questionnaire.
In each of the research sectors covered, respondents were asked to nominate and rank the best five firms and, separately, the best five analysts, taking into account the following criteria:
- Quality of written fundamental research in terms of content and value;
- Accuracy of forecasts and value of buy/sell recommendations;
- Effective communication, written and verbal; and
- Consistency over the past 12 months.
Points were allocated according to the ranking, ranging from five points for a first place to one point for a fifth place.
In the sectors covering institutional sales teams, dealing and back-office administration, the respondents were asked to nominate and rank the firms they considered to be in the top 10.
Two separate forms of weightings were used in this survey.
First, to take account of the highly concentrated structure of asset management in SA, the responding institutions were weighted on the value of their domestic assets managed.
All the rankings for research, sales teams, dealing and administration are presented in two ways, with the responding institutions weighted and unweighted, with all the respondents treated equally. Moreover, the key brokerage functions of research, dealing and administration are treated separately. There is no overall ranking incorporating all these activities.
WHAT IT MEANS
 30 institutions participated
The questionnaire return rate was 100%
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A second form of weighting is applied to the research sectors when calculating the overall rankings of firms for research.
First, a firms' ranking based only on accumulated points (as percentages), treats all the research sectors equally, with no weightings applied. This is the most objective of the firms' overall rankings, as it involves no judgments about sectoral weightings and is not influenced by external factors such as market movements over the year.
Second, an equities research ranking is derived from coverage of the equity sectors listed on the JSE.
Points (as percentages) derived from the responses received in these sectors were weighted according to average values of the constituent companies in the FTSE/JSE shareholders' weighted index, as at the end of March and September 2007, and the end of March 2008.
Finally, the overall ranking of firms for research, with all sectors weighted, is derived from the points gathered by the firms across all the research sectors covered in the survey. Here, weightings based on values in the shareholders' weighted index were applied to the JSE sectors, which were assumed for this purpose to make up 70% of the total. The remaining 30% was applied subjectively (but guided by responses from the respondents) to the non-JSE sectors.
Weightings for these sectors were unchanged from last year. Key areas such as investment strategy, domestic economics, international economies, fixed interest research and commodities carry larger weightings among the macro sectors.
