SQM Research defends ratings process

Mike Taylor

Managing Editor and Publisher

6 August 2025

Research and ratings house SQM Research has expressed concern that its ratings processes with respect to the Shield and First Guardian funds have not been reported in an accurate context.

SQM Research founder and managing director, Louis Christopher responded to media coverage of the issue by stating that under his firm’s methodology the ratings of the two funds had been at the lower end of the scale.

Further, he noted that the ratings assigned to the funds were below the minimum threshold of many platforms for inclusion.

“Some recent media coverage has not presented our ratings in full or accurate context,” he said in a message to clients and on social media.

“SQM Research assigned ratings between 3.5 and 3.75 stars out of 5 to the above-mentioned funds over their lifecycle. These ratings reflected an ‘investment grade’ classification under our methodology, but they were at the lower end of that scale,” Christopher said. “Ratings in this range may reflect characteristics such as limited operating history or areas of governance requiring monitoring. It’s also important to note that many platforms set a minimum threshold of 4 stars for product inclusion.”

“Both funds were subsequently downgraded when we became concerned about limited disclosure, irregularities, and a lack of information from the fund managers.”

Christopher said that publicly available commentary and statements from various parties “suggest that the failure of the funds may involve irregularities in investment activities and the movement of investor funds”.

“It appears that these matters may not have been fully disclosed to ASIC, investors, advisers, platforms, or SQM Research. We understand that ASIC has been investigating these matters for a significant period of time and that questions remain,” his message said.

“We’ve been in ongoing contact with our adviser and platform clients, and we appreciate their continued trust and understanding. We remain available to support all stakeholders during this period and welcome any questions regarding our research process or individual ratings,” Christopher said.

SQM Research is the research partner for Financial Newswire’s Fund Manager of the Year Awards.