- BlackRock UK Smaller Companies Fund & BlackRock UK Smaller Companies Trust enter Academy of Funds with A ratings
- Three funds retain ratings, despite changes to management teams
- Two funds lose Square Mile ratings
Analysts at Square Mile Investment Consulting and Research (Square Mile) conducted 66 interviews with investment professionals from 37 asset management groups during February 2024. Based on the intelligence gained during these meetings, and following reviews in the light of corporate announcements, the following actions have been taken.
New rating
BlackRock: A ratings awarded to BlackRock UK Smaller Companies fund and UK Smaller Companies trust
Square Mile’s team of analysts has introduced the BlackRock UK Smaller Companies fund and the BlackRock Smaller Companies trust into the Square Mile Academy of Funds with A ratings. Both vehicles are managed by Roland Arnold using an approach that seeks to invest in high quality, growing businesses. The analysts consider Mr Arnold to be a pragmatic investor who has proven to be adept in adjusting the risk profile of the strategy underlying both the fund and the trust at appropriate times during the market cycle. Overall, they believe both to be attractive offerings run by a highly experienced manager suitable for investors seeking long-term exposure to UK smaller companies. (Decision as at 1.2.24)
Ratings retained
Schroder US Equity Income Maximiser and Schroder Income Maximiser funds retain A ratings
Schroders recently announced that Mike Hodgson, Head of Risk Managed Investment & Structured Funds, and a co-manager of the Schroder Income Maximiser and the Schroder US Equity Income Maximiser funds, was to leave business with immediate effect.
Mr Hodgson’s team oversees the options overlay element of both funds, which helps enhance their respective yields. Following his departure, Scott Thomson, a co-manager of both funds, will replace Mr Hodgson as team head. Mr Thomson will be ably assisted by existing team members Jeegar Jagani, Kaarthi Chandrasegaram and Ghokhulan Manickavasagar.
Square Mile’s analysts have a high regard for Mr Thomson and believe that the team remains well-resourced and boasts a significant level of experience. Therefore, they confirm that the A ratings of both the Schroder Income Maximiser fund and the Schroder US Equity Income Maximiser fund are retained. (Decision as at 22.2.24)
UBAM Positive Impact Equity fund retains Responsible A rating
In February 2024, UBP announced that Rupert Welchman, senior portfolio manager and co-manager of the UBAM Positive Impact Equity fund, is to leave the group in April this year.
Portfolio managers Charlie Anniss and Adrien Cambonie will remain involved in the strategy, acting as its co-managers. Mr Anniss joined the group in 2016 with 15 years’ investment experience from M&G Investments where he managed the European Smaller Companies fund amongst other strategies whilst Mr Cambonie joined the Positive Impact team as an analyst in 2018. Both Charlie and Adrien have also been co-managers of the UBAM – Biodiversity Restoration fund since its launch in September 2021.
Despite Mr Welchman’s departure, Square Mile’s analysts believe the team is well resourced and they have a high regard for the strong team-based process underpinning this strategy. They have therefore decided to retain the fund’s Responsible A rating. (Decision as at 12.2.24)
Ratings removed
Matthews Asia Pacific Tiger fund loses A rating following earlier suspension
Square Mile suspended the Matthews Asia Pacific Tiger fund’s A rating in December 2023 on the departure of its lead manager, Sharat Shroff. The firm subsequently appointed Inbok Song as lead portfolio manager, to work alongside CIO Sean Taylor. Ms Song and Mr Taylor are in the process of re-invigorating the strategy, which includes adjusting the portfolio construction process. Although Square Mile’s analysts believe this to be a sensible course of action, as yet it is unproven.
The analysts would like to monitor the combination of the changes to the team and approach over time, but in the interim, they have taken the decision to remove the fund from the Academy. (Decision as at 26.2.24)
Janus Henderson Global Equity Income fund loses A rating
Square Mile has decided to remove the A rating from the Janus Henderson Global Equity Income fund following a prolonged period of challenged performance. The analysts note that it is important to recognise that the fund has always taken an approach that is highly defensive, non-cyclical and with a focus on income. However, its total return profile has not met their expectations and they no longer have sufficient conviction in the strategy to justify its continued inclusion in the Academy of Funds. (Decision as at 13.2.24)
