The recent collapses of Shield and First Guardian have cast a spotlight on the interwoven responsibilities within the managed fund ecosystem. Regulatory bodies ASIC and APRA are scrutinising every link in the investment chain, such that the question arises: Is it time to reassess the role of research houses that are funded by the very product issuers they evaluate?

The aftermath of these failures has to date only seen Macquarie Bank bearing the brunt of financial repercussions, with a substantial payout marking the cost of these missteps. Elsewhere the broader response has been one of deflection rather than accountability. Each party, from research house, to trustees and investment platforms, seems intent on shifting the blame to others to some degree, presumably hoping to evade the regulatory spotlight - or financial penalty.

One key issue is the potential conflict of interest inherent in a system where research houses are compensated by the issuers of the products they assess. This arrangement raises questions about the impartiality and rigor of the research provided. If research houses are beholden to the entities that fund them, can their evaluations truly be trusted?

There is no doubt more to be learned about the specific failures of Shield and First Guardian, but one has to question how, reportedly with no track record, they were able to obtain a research rating to start with?

Another issue lies in a "rating" by itself being enough to gain acceptance on a dealer group's APL, and then acceptance on a platform or platforms - both a pre-requisite to raising meaningful funds from investors - with or without dodgy advisors and/or sales techniques by promoters.

There are multiple other questions and issues along the distribution chain, including who is ultimately responsible for approving a fund for distribution. If the research house is not responsible or disclaims liability, will this lead to trustees and platforms taking over the research function. If so, who pays?

Other issues relate to the "gap" between a fund's approved rating, and its actual performance. How can a fund with long term (say seven year) fourth quartile performance still receive a recommended (or higher) rating? Qualitative assessment must be viewed in light of actual past performance. Even if the disclaimers state that past performance is no guarantee, "let the numbers do the talking" does provide hard evidence.

As a provider of research ourselves, FundMonitors.com is well aware we're potentially tarred with the same brush. However, for the record, our focus is on quantitative performance and risk analysis, and on our "Ratings" tab you can match performance ranking with a range of ratings and recommendations from leading research houses.

This situation calls for a critical examination of the roles and responsibilities across the managed fund landscape. Trustees and platforms must also be held accountable for their part in the due diligence process. Ensuring that each link in the investment chain operates with integrity is crucial not just for regulatory compliance, but for rebuilding trust with investors.

As the industry grapples with these challenges, it becomes evident that a collective effort is needed to realign incentives and responsibilities. Only through such reforms can the managed fund sector hope to prevent future debacles and restore investor confidence.