Analysts at Square Mile Investment Consulting and Research (Square Mile) conducted 72 interviews with investment professionals from 40 asset management groups during February 2025.
Based on the intelligence gained during these meetings and in light of recent corporate announcements, the following actions have been taken:
New rating
Vanguard FTSE U.K. Equity Income Index awarded a Recommended rating
Square Mile’s team of analysts have awarded the Vanguard FTSE U.K. Equity Income Index fund a Recommended rating and it enters the Academy of Funds. The fund complements the 26 passive equity vehicles that Square Mile currently rates from Vanguard.
The fund tracks the FTSE U.K. Equity Income Index which takes the 350 largest listed stocks domiciled in the UK, removes Investment Trusts and REITS as well as stocks which are not forecasted to pay dividends over the next 12 months. The remaining universe is ranked by forecasted annual dividend yield, with broadly the top 50% of stocks then included in the benchmark. Weighting is done by float adjusted market capitalisation, reducing deviation from the broader market.
Square Mile’s Recommended rating reflects the analysts’ view that the fund presents a credible option for investors seeking higher dividends while maintaining broad UK equity exposure, at a low cost. The analysts have a high regard for the passive team at Vanguard, believe the fund is competitively priced, and are confident the fund will track its benchmark to within a reasonable range, as it has done historically. (Decision as at 14.02.25)
Upgraded rating
Waverton Sterling Bond fund upgraded from A to AA rating
Square Mile’s analysts have upgraded the Waverton Sterling Bond fund from an A to AA rating. This reflects their conviction on the core fixed income approach taken by Jeff Keen and his team. While performance has been challenged over recent months, the fund maintains the attributes to potentially play an attractive role as a diversifier within a multi-asset portfolio, thanks to its focus on delivering returns with low correlation to equities. (Decision as at 21.02.25)
Ratings retained
Schroder Global Energy Transition fund retains Responsible A Rating
Following the recent announcement regarding the renaming of the Schroder Global Energy Transition fund to the Schroder Global Alternative Energy fund, effective from 26 February 2025, Square Mile confirms the strategy will retain its Responsible A rating. There will be no changes to the way that the fund is managed, nor will its risk profile be altered.
The rationale for the changing of the name is to clarify that rather than investing in companies that are themselves transitioning to become more sustainable, the fund selects companies that contribute to the wider global transition to towards alternative, lower carbon sources of energy.
Additionally, the fund’s investment policy has been updated to clarify that the fund may invest directly in China H-Shares and may invest up to 15% of its assets directly or indirectly in China A-Shares and China B-Shares through Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, and shares listed on the STAR Board and the ChiNext. The fund is already permitted to invest in these types of shares, but Schroders is making this change so that investors can better understand the level of exposure that the fund may have to these assets. The name change is unrelated to the investment policy change described above. (Decision as at 26.02.25)
Invesco Asia Dragon Trust retains its A rating
Following the recent merger of the Asia Dragon Trust into the Invesco Asia Trust and the subsequent name change to Invesco Asia Dragon, Square Mile has maintained the strategy’s A rating. Square Mile’s analysts believe this news to be positive as the trust will continue to be managed by the Invesco Asia Trust’s skilled co-managers, Fiona Yang and Ian Hargreaves, along with an investment process and strategy that will remain unchanged. Additionally, the trust’s larger size, as well as the resulting reduction in management fees and expected lower ongoing costs over time, should make it more marketable to a wider range of investors. Square Mile believes that the combination of these factors should be beneficial for shareholders. (Decision as at 17.02.25)
Ruffer Investment Company and Ruffer Diversified Return fund retain A ratings
Following the recent announcement that Duncan MacInnes, named co-fund manager for the Ruffer Diversified Return fund and Ruffer Investment Company has left the firm, Square Mile’s analysts confirm that they have retained their A ratings on both strategies. While Mr MacInnes was a co-manager on the fund and investment trust, as well as a member of the firm’s asset allocation committee, the decision-making process which underlines portfolio construction is largely driven by the co-CIOs of the firm, Henry Maxey and Neil Mcleish. Ruffer Diversified Return will continue to be managed on a day-to-day basis by current co-managers Ian Rees and Jasmine Yeo and Ruffer Investment Company will continue to be managed by Jasmine Yeo, with Ian Rees and Alex Chartres becoming co-managers.
Overall, given that the senior management structure remains unchanged and hence the investment approach remains stable, the analysts are comfortable retaining the ratings on both versions of the strategy. (Decision as at 13.02.25)
