- Five new ratings, including two Responsible A ratings
- One fund upgraded, one downgraded
- Four ratings removed
Analysts at Square Mile Investment Consulting and Research (Square Mile) conducted 45 interviews with investment professionals from 20 asset management groups over the course of April 2021. Based on the intelligence gained at these meetings, the following actions have been taken.
Principal GIF Finisterre Unconstrained Emerging Markets Fixed Income fund: awarded A Rating
Square Mile’s analysts have introduced the Principal GIF Finisterre Unconstrained Emerging Markets Fixed Income fund into the Academy of Funds with an A rating. The team notes the fund managers’ innovative investment approach, particularly the way in which they sub-classify their investment opportunities, combining different sources of returns across income, alpha, momentum and relative value strategies.
The fund provides exposure to the returns of the global emerging market debt universe within a total return approach with a focus on downside protection. This results in a more conservative, lower volatility, solution for investors looking to diversify their fixed income exposure with emerging market debt. (Decision as at 24.04.21)
LF Havelock Global Select fund: awarded Positive Prospect
The Square Mile Research team has awarded a Positive Prospect rating to the LF Havelock Global Select fund reflecting its potential of becoming a major competitive proposition. Manager Matthew Beddall has a lengthy career of investing in global equities, having previously worked at Winton for 17 years. The fund launched in August 2018 and has so far delivered a positive track record to its investors. It is likely to appeal to investors seeking exposure to a concentrated global value portfolio where the manager applies flexible allocation to limit the fund’s risk, thus leading to long-term outperformance. The fund is currently small at around £24 million and the firm is in its infancy and so the team will consider the fund for a full rating as the fund and the firm matures. (Decision as at 19.04.21)
JPM Global Bond Opportunities Sustainable fund: awarded Responsible A Rating
Square Mile has given a Responsible A rating to the JPM Global Bond Opportunities Sustainable fund. The analysts consider this to be a solid strategic bond strategy, run by an experienced team of investors and supported by the very substantial resources of JP Morgan’s broader fixed income and macroeconomic teams. It offers the benefits of responsible investing through the combination of integrated ESG analysis, a series of exclusions and the application of a ‘positive tilt’ towards companies with better ESG profiles or positive momentum and away from the ESG laggards. (Decision as at 13.04.21)
FP Carmignac European Leaders fund: awarded a Responsible A rating
Square Mile has introduced the FP Carmignac European Leaders fund into the Academy of Funds with a Responsible A rating. The fund’s manager, Mark Denham, is an experienced investor, who invests with a socially responsible focus and excludes controversial stocks. The strategy focuses on identifying companies which the manager believes have the potential of delivering high and sustainable profitability and can reinvest internally in their businesses for future growth. In addition, it has a straightforward and robust bottom-up investment process. Although the fund was only launched in May 2019, investors should not be deterred by its relatively short history, as the manager has a long track record of managing money at a previous firm. He has also managed the Carmignac Portfolio Grande Europe which invests in Europe including the UK, since November 2016, using a similar investment process. Overall, Square Mile believes this fund to be an attractive and differentiated offering for long-term investors. (Decision as at 09.04.21)
GAM Star Continental European Equity fund: awarded an A rating
Square Mile has awarded the GAM Star Continental European Equity fund an A rating. Its manager Niall Gallagher has a lengthy career of investing in European equities and runs the fund with a philosophy of investing in companies that intelligently allocate shareholder capital to generate superior returns. The fund is likely to appeal to investors who want to limit factor risks relative to the European equity market and benefit from an experienced manager picking stocks to achieve long-term outperformance. (Decision as at 07.04.21)
Matthews Asia ex Japan Dividend fund: upgraded from a Positive Prospect to an AA Rating
Square Mile’s analysts have upgraded the Matthews Asia ex Japan Dividend fund from a Positive Prospect to an AA rating. This upgrade follows the fund meeting a number of milestones since it was introduced into the Academy of Funds in 2018, including having a more diversified investor base, growth in its underlying assets and a reduction in the ongoing charge figure. (Decision as at 12.04.21)
JPM Unconstrained Bond and JPM Global Bond Opportunities Sustainable funds: A and Responsible A ratings retained
Following the news that executive director Diana Amoa is leaving JP Morgan with immediate, Square Mile confirms that the JPM Unconstrained Bond and JPM Global Bond Opportunities Sustainable funds will retain their respective A and Responsible A ratings.
In recognition of the importance of the bottom-up selection to the process, Ms Amoa and three other sector specialists were designated co-portfolio managers of the JPM Unconstrained Bond and JPM Global Bond Opportunities Sustainable fund in July 2020. The emerging market debt team is comprised of more than 40 dedicated portfolio managers, analysts and traders, and their input on market views and bottom-up selection will remain unchanged. The investment process is based on the depth and strength of this team-based culture and Square Mile’s analysts believe this departure will not have a significant impact on the funds. (Decision as at 14.04.21)
News from BMO Asset Management and Columbia Threadneedle Investments of planned Acquisition: all ratings retained
Following the news of the acquisition of BMO Asset Management’s EMEA business by Ameriprise Financial Inc, Square Mile has decided to maintain its ratings on all funds managed by the two groups for now.
Ameriprise are the owners of Columbia Threadneedle Investments (CTI) and this is a substantial acquisition on their part. Square Mile rates several funds managed by CTI as well as BMO’s Pyrford Global Total Return fund and some of their multi-manager strategies. Square Mile believes that at this early stage of the process it is “business as usual” at both firms, but the analysts will monitor developments closely as details of the acquisition become clearer. The transaction is expected to complete by the end of the calendar year subject to regulatory and other approvals. (Decision as at 14.04.21)
Trojan Income fund: rating downgraded from an AA to an A rating
To reflect the loss of Francis Brooke’s investment experience as lead manager of the Trojan Income fund at the end of 2021, Square Mile has downgraded the Trojan Income fund’s rating from an AA to an A rating. Square Mile’s analysts continue to believe that the fund warrants a place within the Academy on the strength of the remaining team and their confidence that Blake Hutchins, who will become the fund’s lead manager from 1st January 2022, will continue to apply the long standing investment approach. (Decision as at 12.04.21)
ASI MyFolio Market, Managed and Multi-Manager fund ranges: ratings removed
Following the news that Joe Wiggins, Head of Portfolio Management, Matthew Wiles, and Matt Shaw, Investment Analysts, are to leave ASI Square Mile has removed its ratings from the MyFolio Market, Managed and Multi Manager fund ranges. These departures follow the loss of Bambos Hambi, previous Head of Multi Manager Strategies at ASI, to Quilter Investors in June 2020. Whilst acknowledging the size of the resources that continue to support the ranges, Square Mile’s conviction in the team has been waning and has reached a level where the analysts have decided to remove the ratings from these ranges. (Decision as at 14.04.21)
Schroder Sterling Corporate Bond Fund: A rating removed
Square Mile has removed the Schroder Sterling Corporate Bond fund’s A rating on news that its manager Jonathan Golan is to leave the firm. While the team’s collaboration is a key asset of the strategy, Square Mile’s analysts consider Mr Golan to have been a major attribute to its success in recent years and a primary factor in their conviction in the fund. The process will remain the same, with new managers Julian Houdain and Daniel Pearson assuming Mr Golan’s responsibilities on the fund and Square Mile will continue to monitor the fund’s progress under the new management. (Decision as at 06.04.21)