Rating agency Moody's has published the rating methodology it uses to evaluate asset management firms. Moody's maintains ratings on 15 asset management firms, which have around USD 12 bn of rated outstanding debt. These firms collectively have assets under management of over USD 6.5 trillion. 5 key rating factors the methodology focuses on are: market position; distribution and services; the diversification and retention of assets under management; financial flexibility; and profitability/revenue stability. Matthew Noll, senior credit officer at Moody's, says, “Issuers and investors will clearly see the relationship between specific financial metrics and our ratings, and how the judgments of analysts are incorporated into the process.”

There are more subjective factors which are considered for evaluation, such as management; corporate governance and risk management; accounting policy and disclosure; sovereign and regulatory environment; and ownership/support. Global regulators have been calling on rating agencies to improve transparency in the wake of supposed failings in averting the recent credit crisis.

To think creatively, we must be able to look afresh at what we normally take for granted