According to Square Mile, four funds/fund ranges have joined their Academy of Funds with new ratings this past month, three funds retain ratings, despite changes to management teams whilst two funds have seen their ratings suspended and one fund rating has been revised. Also one fund has lost its Square Mile rating.
As reported today, analysts at Square Mile Investment Consulting and Research (Square Mile) have conducted 52 interviews with investment professionals from 31 asset management groups during January 2024. Based on their intelligence gained during these meetings, and following reviews in the light of corporate announcements, the following actions have been taken by Square Mile in terms of their fund rating and details are given below:
BNY Mellon Futurelegacy fund range awarded Responsible Positive Prospect Rating
Square Mile’s team of analysts have introduced the BNY Mellon Futurelegacy fund range to the Square Mile Academy of Funds with a Responsible Positive Prospect rating. Although this strategy, which comprises five funds, was launched relatively recently, the analysts believe it has several attractive features. The funds within the range are managed by the multi-asset team at BNY Mellon affiliate Newton Investment Management, and benefit from its experience and expertise, along with the long-standing responsible investment capabilities of the firm. BNY Mellon’s scale and the directly invested nature of the portfolios mean that they can be offered at what the analysts feel is an attractive price point.
In what is an under-represented area of the market, Square Mile believes this range has all the attributes necessary to provide competitive long-term returns whist following the team’s sustainable investment approach. (Decision as at 31.1.24)
Brown Advisory Global Leaders fund awarded AA rating
Square Mile has awarded the Brown Advisory Global Leaders fund an AA rating and it joins the Academy of Funds. Launched by managers Mick Dillon and Bertie Thomson in 2015, the fund is an actively managed, concentrated portfolio of 30 to 40 stocks which the managers believe have the ability to compound excess economic returns over the long-term. Overall, Square Mile’s analysts believe the strategy is differentiated from its peers and is a very solid offering for long-term investors looking for a quality global equity strategy. (Decision as at 30.1.24)
Aikya Global Emerging Markets fund awarded Responsible A Rating
Square Mile’s analysts have also introduced the Aikya Global Emerging Markets fund into the Academy of Funds with a Responsible A rating. The analysts consider this to be a solid long-term proposition for investors, run by a group whose sole focus is on investing in emerging market equities in a responsible manner. Additionally, they note that its London-based team has built a comprehensive and robust investment philosophy and process. (Decision as at 24.1.24)
Rathbone Greenbank Multi-Asset Portfolios awarded Responsible Recommended Rating
Square Mile has awarded the Rathbone Greenbank Multi-Asset Portfolios a Responsible Recommended rating. Although this fund range has a relatively limited history, the team has built an impressive track record on its flagship Multi-Asset Portfolio range. This, coupled with the team’s collaboration with Rathbone Greenbank, whose heritage in responsible investing dates to 1992, gives the range significant credibility. The analysts therefore believe the range represents a robust option for investors seeking a strategy which combines an active multi-asset risk managed approach, alongside a focus on targeting companies and sovereigns which meet a clearly defined set of sustainability criteria. (Decision as at 16.1.24)
CT UK Social Bond fund retains Responsible A rating
Square Mile’s team of analysts have decided that the CT UK Social Bond fund should retain its Responsible A rating despite the recently announced departure of deputy co-portfolio manager Ben Kelly. Tammie Tang remains the fund’s lead manager, with Andrew Brown joining Andrew Dewar as a deputy co-portfolio manager. The analysts note that the team continues to be supported by Letty Byatt, a dedicated social bond analyst, as well as 18 investment grade analysts. In addition, Ms Tang and her team are supported by an extensive specialist responsible investment team. This development therefore raises no concerns and Square Mile believes the fund continues to merit its Responsible A rating. (Decision as at 25.1.24)
Artemis SmartGARP Global Emerging Markets Equity fund retains A rating
Artemis Investments recently announced that Peter Saacke, co-manager of the Artemis SmartGARP Global Emerging Markets Equity fund, intends to retire from fund management and will leave Artemis at the end of June 2024. Fellow co-manager Raheel Altaf will take sole lead manager responsibility for this fund, as well as the global equity strategy, which is managed using the same SmartGARP process. Square Mile’s analysts believe Mr Altaf is well-versed with the approach having joined the team in 2014 and they view this change as a natural evolution. He is supported by the SmartGARP team which includes Philip Wolstencroft and investment analyst Aalok Sathe, as well as the firm’s wider resources. Overall, the analysts have no concerns regarding this development and maintain the fund’s A rating. (Decision as at 23.1.24)
WS Montanaro UK Income fund retains Responsible A rating
Square Mile has retained the WS Montanaro UK Income fund’s Responsible A rating despite the news that co-manager Charles Montanaro will step back into a supporting role on the strategy with fellow co-manager, Guido Dacie-Lombardo, assuming sole lead manager responsibilities. The analysts note that this transition has been well managed and sign posted. Moreover, Mr Dacie-Lombardo has run the fund on a day-to-day basis over recent years and they therefore see this move as effective succession planning. (Decision as at 17.1.24)
Jupiter Value funds’ ratings suspended
Square Mile has suspended the AAA rating held by the Jupiter UK Special Situations fund and the A rating awarded to the Jupiter Global Value Equity fund on the news that Ben Whitmore and Dermot Murphy are to leave the firm by July 2024 to establish an independent investment boutique.
At the same time, it was confirmed that Alex Savvides will join Jupiter from JO Hambro Capital Management in late summer to assume responsibility for the UK equities element of the franchise. However, there has been no announcement to date on a replacement manager for the global equity assets and discussions are ongoing as to whether they will transfer to Mr Whitmore’s and Mr Murphy’s new venture. Square Mile’s analysts continue to monitor the situation closely and will provide updates on both strategies in due course. (Decision as at 10.1.24)
AXA Framlington UK Select Opportunities fund moves from A rating to Positive Prospect
In November 2023, Chris St John, former lead manager of the AXA Framlington UK Select Opportunities fund, became its deputy manager while Nigel Yates was promoted from deputy to lead manager of the fund. Mr Yates, who joined AXA Framlington in 2021, has gained longstanding UK multi-cap equity experience at NFU and the fund will continue to benefit from Mr St John’s involvement. The analysts believe this will ensure continuity of investment approach true to the long held multi-cap quality growth process and therefore have sufficient conviction in the fund to award it a Positive Prospect rating at this time. (Decision as at 3.1.24)
Trio of BNY Mellon funds lose ratings following earlier suspensions
Square Mile suspended the ratings on the BNY Mellon Global Dynamic Bond, BNY Mellon Sustainable Global Dynamic Bond and BNY Mellon Global Dynamic Bond Income funds in June 2023 on the news that Paul Brain, the funds’ lead manager and Newton’s head of fixed income, was to assume the role of deputy chief investment officer of multi-asset. He was replaced as the funds’ named manager in December 2023 by Ella Hoxha, who joined from Pictet.
Square Mile’s analysts recently met the new portfolio manager and discussed several changes that are being implemented to portfolio construction and they believe that it will take time to fully appreciate the impact of those changes. Additionally, medium term returns have not been in line with expectations and Square Mile has therefore decided to remove the funds’ ratings. (Decision as at 15.1.24)