Analysts at Square Mile Investment Consulting and Research (Square Mile) have conducted 46 interviews with investment professionals from 28 asset management groups during May 2024. Based on the intelligence they gained during these meetings, and following reviews in the light of corporate announcements, the group says that the following actions have been taken.
Square Mile’s new ratings are:
Fidelity China Special Situations PLC awarded A rating
Square Mile’s team of analysts have awarded an A rating to Fidelity China Special Situations PLC and it enters the Academy of Funds. The analysts believe this to be an attractive strategy for long-term investors seeking a broad exposure to China. It offers access to both listed and unlisted companies as well as those with significant interest in Chinese markets and has a notable exposure towards medium and smaller sized companies. The analysts consider the combination of an experienced portfolio manager, supported by a well-resourced analyst team, and an efficacious process within an under researched opportunity set to be an appealing offering for long-term oriented investors. (Decision as at 24.05.24)
Capital Group New Perspective fund awarded A rating
Square Mile has introduced the Capital Group New Perspective fund into the Academy of Funds with an A rating. Whilst this Luxembourg-domiciled fund was launched in 2015, the broader strategy has a track record spanning over half a century. Drawing upon Capital Group’s multiple-manager approach, the strategy takes a flexible approach to managing assets to identify transformational changes in the global economy and to benefit from long-term structural trends in markets.
Square Mile’s analysts have a favourable view of the fund: it has a proven track record of delivering excess returns through the cycle and of keeping up when market leadership changes. Overall, they believe this fund to be a solid offering for long-term investors looking for a global equity strategy that is managed in a risk aware manner and seeks to remain competitive across most market conditions. (Decision as at 22.05.24)
Ratings retained
Baillie Gifford Strategic Bond fund retains its A rating
Following the announcement that Torcail Stewart, co-portfolio manager of the Baillie Gifford Strategic Bond fund, will leave Baillie Gifford in August 2024 to pursue a career in teaching, Square Mile’s team of analysts have decided to retain the fund’s A rating. Lesley Dunn, Partner and Head of Credit, and Robert Baltzer, Head of Credit Research will continue to co-manage the fund following Mr Stewart’s departure.
The analysts’ conviction in this fund is based on the long-established investment process and the highly collegiate team-based management approach. Therefore, they do not believe that Mr Stewart’s departure will have a detrimental impact on the strategy. (Decision as at 24.05.24)
HSBC Global Strategy Range retains Recommended rating
Following the news that Kate Morrissey, Head of World Selection Funds, is to leave HSBC, Square Mile confirmed that the HSBC Global Strategy range, encompassing the Cautious, Conservative, Balanced, Dynamic and Adventurous funds, will retain its Recommended rating.
Although Ms Morrissey was the funds’ lead manager, she had reduced her involvement in the day-to-day management of the range since the second half of 2023, with that responsibility falling to deputy manager Nicholas McLoughlin. Mr McLoughlin will now formally transition to lead manager, providing continuity in what is very much a team-based approach. Mr McLoughin has been with the business since 2018, and he will now be appointed Head of Managed Solutions Funds. Existing team members Arthur Chevalier and Arnaud Battistella will become deputy managers.
Having met with Mr McLoughin on several occasions, Square Mile’s analysts are confident in his ability to lead this range, supported by the extensive resources within HSBC’s wider Global Multi Asset team. (Decision as at 16.05.24)
Ratings retained/downgraded
Premier Miton:
Multi-Manager Liberation range and Multi-Asset Global Growth fund retain ratings
Multi-Asset Distribution and Multi-Asset Monthly Income funds downgraded from AA to A ratings
On the recent news that Premier Miton has promoted Ian Rees to sole head of the multi-manager team, Square Mile’s analysts have retained their ratings on the funds for which he and the team are responsible. Mr Rees has been at Premier Miton for over 20 years and has overseen multi-manager funds since 2005. Over this time these strategies have been managed using a consistent process, which will continue to be applied.
Effective from 1st July 2024, David Hambidge, the long-standing co-head of the multi-manager team will step back from day-to-day fund management responsibilities. In recognition of this, and the loss of Mr Hambidge’s extensive investment experience, the analysts have reduced the ratings on the Multi-Asset Distribution and Multi-Asset Monthly Income funds from AA to A. However, the ratings on the Liberation range and Multi-Asset Global Growth fund will remain unchanged at Recommended and A respectively. (Decision as at 31.05.24)
Ratings removed
Baillie Gifford Multi Asset Growth fund loses A rating
Square Mile’s analysts have taken the decision to remove the Baillie Gifford Multi Asset Growth fund’s A rating. Its medium-term performance has been disappointing and not in line with the analysts’ expectations. This, coupled with changes within the underlying team, has led to their conviction falling to a level where they no longer feel they can support the fund’s place within the Academy of Funds. (Decision as at 31.05.24)
GAM Star Japan Leaders fund loses A rating
Square Mile’s conviction in the GAM Star Japan Leaders fund has waned due to instability in the management team over recent years and a continual decline in assets under management. Therefore, the analysts have taken the decision to remove the fund’s A rating and it leaves the Academy of Funds. (Decision as at 09.05.24)
Allianz Strategic Bond, Allianz Index-Linked Gilt, and Allianz Gilt Yield fund lose A ratings
Following the news that Mike Riddell, lead manager of the A rated Allianz Strategic Bond, Allianz Index-Linked Gilt and Allianz Gilt Yield funds will depart the business in June, Square Mile’s analysts have removed the A ratings on all three strategies.
Julian Le Beron, CIO of Core Fixed Income at Allianz, will assume immediate control of the funds, bringing a different investment approach. As the funds’ ratings were centred around the analysts’ conviction in Mr Riddell and the process which he built over several years at Allianz, they feel they can no longer support their inclusion in the Academy of Funds. (Decision as at 02.05.24)
