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Square Mile Academy of funds: Ratings round-up for July 2021

  • Four new ratings awarded, including two Responsible ratings
  • Three ratings retained
  • One rating downgrade and two ratings removed

Analysts at Square Mile Investment Consulting and Research (Square Mile) conducted 51 interviews with investment professionals from 21 asset management groups over the course of July 2021. Based on the intelligence gained at these meetings, the following actions have been taken.

New ratings

PIMCO Climate Bond fund awarded Responsible Positive Prospect Rating

Square Mile’s analysts have introduced the PIMCO Climate Bond fund to the Academy of Funds with a Responsible Positive Prospect rating. These ratings are awarded to responsible funds which have the potential to be highly compelling propositions but where the analysts need more time to be satisfied that the fund merits a full rating – in this instance, a longer track record. The fund invests in issuers that display strong ESG practices and that are leaders in environmental and climate mitigation activities. Launched in September 2020, the fund has made a positive start, delivering returns in line with the global credit market while demonstrating strong environmental impact credentials. (Decision as at 28.07.21)

FP WHEB Sustainability fund awarded Responsible AA Rating

Square Mile has awarded the FP WHEB Sustainability fund a Responsible AA rating. The team of analysts believe WHEB Asset Management to be a pioneer in responsible investing and they have a favourable view of the fund’s investment philosophy. This is to invest in high quality and growing companies that provide solutions to sustainability challenges, while trading on reasonable valuations. Square Mile considers this to be an attractive global equity fund for investors seeking to grow their financial wealth, as well as having a positive impact on the environment and society over the long term.  (Decision as at 26.07.21)

Fulcrum Thematic Equity Market Neutral fund awarded A Rating

The Fulcrum Thematic Equity Market Neutral fund has been admitted into the Academy of Funds with an A rating. This fund combines both long and short investments in equity markets and possesses the characteristics that Square Mile regards as attractive in an absolute return fund. It will always have very low net market exposure and there is a proven track record of performance being driven almost entirely through stock and theme selection. In addition, the strategy’s returns exhibit very low, and currently negative, correlation to those from stock markets. By investing thematically and employing extensive diversification in the expression of those themes, the fund also has little stock-specific risk.

The analysts believe that the fund is likely to protect investors’ capital in a severe stock market downturn. However, they also expect some volatility in its monthly returns because, although the fund’s net market exposure is always low, its gross exposure (long exposure plus short exposure) often exceeds 200%. (Decision as at 20.07.21)

Schroder US Equity Income Maximiser fund awarded A Rating

Square Mile has awarded the Schroder US Equity Income Maximiser fund an A rating. The analysts believe the fund can produce a yield of 5% p.a. while providing investors exposure to the US equity market. US equities represent 60-70% of global equity markets yet are a naturally lower yielding asset class, and so this fund offers an option for investors who seek exposure to the region but who also have a requirement for income. This fund is significantly cheaper than many of its active peers and therefore represents good value for money. (Decision as at 01.07.21)

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