Square Mile Academy of Funds: Ratings Round-Up for March 2024

by | Apr 8, 2024

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  • CT Global Social Bond fund enters Square Mile Academy of Funds
  • One rating upgraded
  • Three ratings retained
  • Two funds lose ratings
  • One trust loses its rating following its merger into another trust

Analysts at Square Mile Investment Consulting and Research (Square Mile) conducted 58 interviews with investment professionals from 31 asset management groups during March 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

CT Global Social Bond fund awarded Responsible Positive Prospect rating

 
 

Square Mile’s team of analysts have admitted the CT Global Social Bond fund to the Academy of Funds with a Responsible Positive Prospect rating.  While the fund’s track record is short, having launched in June 2023, it leverages on the expertise within the CT Social Bond team in managing social bond strategies dedicated to Europe and the UK. The UK Social Bond strategy has a history dating back to 2013 and the team has consistently produced returns in line with credit market benchmarks while delivering positive social outcomes. (Decision as at 27.03.24)

Rating upgrade

PIMCO Climate Bond fund upgraded to Responsible A rating

 
 

Square Mile has upgraded the rating awarded to the PIMCO Climate Bond fund from a Responsible Positive Prospect to a Responsible A rating.  Since its inception in September 2020, the fund has delivered a solid track record, outperforming its global credit benchmark and with significantly lower carbon emissions.  It achieves this by investing in a portfolio that combines green bonds with bonds issued by companies that are leaders in mitigating carbon emissions in their respective industries. (Decision as at 18.03.24)

Ratings retained

TwentyFour Strategic Income fund retains AA rating

 
 

Despite the news that Mark Holman, partner and portfolio manager at TwentyFour, will retire from the business in June 2024, Square Mile’s analysts have decided to retain the TwentyFour Strategic Income fund’s AA rating.  They acknowledge that Mr Holman’s exceptional expertise in the analysis of financial companies and portfolio management will be missed. However, they maintain their conviction in the fund’s rating on account of the firm’s strong resources, long-established investment process and highly collegiate team-based management approach. Long standing co-portfolio managers Eoin Walsh, Felipe Villarroel, and David Norris remain in their roles and have worked alongside Mr Holman for several years. Therefore, the analysts do not believe that Mr Holman’s departure will have a detrimental impact on the strategy.

Square Mile would like to congratulate Mr Holman on his long and successful career and wish him all the best in his retirement. (Decision as at 28.03.24)

Waverton Sterling Bond and Waverton Multi-Asset Income funds retain A ratings

 
 

At the end of February, the management of Waverton and London & Capital announced an agreement to merge the two businesses, subject to regulatory approval.  In light of this news, Square Mile’s analysts reviewed the A ratings held by the Waverton Sterling Bond and Waverton Multi-Asset Income funds.  Given that the intention is to leave the investment teams, philosophy and processes behind these funds unchanged post-merger, the analysts have decided to maintain their respective A ratings, while continuing to monitor any further developments. (Decision as at 01.03.24)

Ratings removed

Fidelity Multi-Asset Income fund loses A rating

 
 

Square Mile suspended the Fidelity Multi-Asset Income fund’s A rating in September 2023 on the news that Eugene Philalithis would retire from day-to-day management of the fund at the end of March 2024. The analysts have since met with the fund’s new lead manager, Talib Sheikh, and believe that under his leadership the investment approach is likely to evolve. They expect it to become more flexible and dynamic to meet what the manager expects to be a fluid macroeconomic environment over the coming years. The analysts would prefer to see how the combination of the changes to the team and approach progresses over time, and so have consequently removed the fund from the Academy.  (Decision as at 28.03.24)

Baillie Gifford Japanese Income Growth fund loses A rating

While recognising that the Baillie Gifford Japanese Income Growth fund takes has a growth biased approach, Square Mile’s conviction in the strategy has fallen following its recent performance profile which has not met expectations. In addition, the analysts note decreasing levels of differentiation against the team’s flagship Japanese fund where they maintain their conviction and which they believe to be the purest representation of the investment team’s objectives. They have therefore decided to remove the A rating from the Baillie Gifford Japanese Income Growth fund. (Decision as at 21.03.24)

 
 

Investment trust update

Troy Income & Growth Trust update

In early December 2023, Square Mile reported that the boards of the Troy Income & Growth Trust (TIGT) and the STS Global Income & Growth Trust (STS) had proposed the merger of the two trusts.  As a result, Square Mile suspended the A rating held by Troy Income & Growth Trust.   Shareholders have now voted in favour of this proposal and the two trusts will merge with effect from the 2nd of April 2024. Consequently, TIGT will cease to exist and it has therefore been removed from the Academy of Funds. (Decision as at 27.03.24)

 
 

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