Analysts at Square Mile Investment Consulting and Research (Square Mile) conducted 70 interviews with investment professionals from 41 asset management groups over the course of May 2023.
Based on the intelligence gained during these meetings, and following reviews in the light of corporate announcements, the following actions have been taken.
L&G UK Mid Cap Index fund awarded Recommended rating
Square Mile’s team of analysts have awarded a Recommended rating to the L&G UK Mid Cap Index fund. This fund tracks the FTSE 250 ex-Investment Trust Index which represents the 100-350 largest stocks listed in the UK. However, as the fund does not invest in investment trusts it is limited to broadly 160-180 stocks. Since launch, the fund has tracked its benchmark to within an acceptable range and is one of the cheapest UK mid-cap passive funds in the sector. (Decision as at 25.05.23)
Vanguard FTSE 100 Index fund awarded Recommended rating
Square Mile has also awarded a Recommended rating to the Vanguard FTSE 100 Index Fund. This is a passive fund which tracks the FTSE 100 Index, representing the 100 largest stocks listed in the UK. This fund has historically tracked its benchmark within a reasonable range and is competitively priced. (Decision as at 25.05.23)
L&G Future World Range awarded Responsible Recommended ratings
Square Mile’s analysts have awarded Responsible Recommended ratings to five new index funds within L&G’s Future World Index Range:
- L&G Future World ESG Europe ex UK Equity Index
- L&G Future World ESG North America Equity Index
- L&G Future World ESG Japan Equity Index
- L&G Future World ESG Asia Pacific ex Japan Equity Index
- L&G Future World ESG Emerging Equity Index
These funds join the Global and UK Future World Index funds which are already in Square Mile’s Academy of Funds. The analysts have high regard for the team running these funds and note in particular their work in collaboration with Solactive to create customised indices for the funds to track. ESG is incorporated into these new indices through a combination of exclusions, tilting and optimisation resulting in improvements relative to each original market cap weighted index. (Decision as at 02.05.23)
Jupiter UK Special Situations fund upgraded to a AAA rating
Square Mile has upgraded its rating on the Jupiter UK Special Situations fund from AA to AAA. Manager Ben Whitmore is a high conviction contrarian investor, who throughout his career has remained disciplined to his chosen investment approach. Whilst his value style can move in and out of favour, his ability to remain dispassionate about the companies he holds is one of the most compelling features of the strategy, ensuring the portfolio remains a true representation of the philosophy and process applied.
Overall, the analysts regard this offering as one of the most impressive of its kind and is one that will reward investors well over the long term and therefore warrants Square Mile’s highest accolade. (Decision as at 05.05.23)
Liontrust’s acquisition of GAM – all ratings retained
On the news of Liontrust Asset Management’s intention to acquire GAM Holding AG, Square Mile has decided to maintain the ratings on the funds listed below. The deal is currently subject to regulatory and shareholder approval and is due to complete in Q4. Liontrust has indicated that GAM’s range of products and strategies are complementary to its own offering and is therefore seeking to retain GAM’s underlying investment teams. The analysts believe that the management of all Square Mile-rated funds is unlikely to be materially impacted by the deal and they, along with the other investment teams from the combined group, are expected to benefit from a larger distribution footprint and marketing capability. Square Mile will provide an update on any new developments in due course.
- GAM Star Continental European Equity fund (A)
- GAM Star Japan Leaders fund (A)
- Liontrust European Dynamic fund (A)
- Liontrust Special Situations fund (AA)
- Liontrust UK Equity fund (A)
- Liontrust UK Growth fund (A)
- Liontrust UK Smaller Companies fund (AA)
- Liontrust Sustainable Future Corporate Bond fund (Responsible A)
- Liontrust Sustainable Future Monthly Income Bond fund (Responsible A)
- Liontrust Sustainable Future Cautious Managed fund (Responsible Recommended)
- Liontrust Sustainable Future Defensive Managed fund (Responsible Recommended)
- Liontrust Sustainable Future Global Growth fund (Responsible Recommended)
- Liontrust Sustainable Future Managed fund (Responsible Recommended)
- Liontrust Sustainable Future Managed Growth fund (Responsible Recommended)
(Decision as at 17.05.23)
Artemis Global Select fund loses AA rating
Following February’s announcement that Alex Illingworth, co-manager of the Artemis Global Select fund would be leaving the business with immediate effect and that lead manager, Simon Edelston, would be retiring at the end of 2023, Square Mile’s analysts suspended the fund’s AA rating. They have subsequently met the new manager, Alex Stanic, to review the fund and have taken the difficult decision to remove its rating.
Although they acknowledge the philosophical similarities between Mr Edelsten and Mr Stanic, the analysts feel that there will be material changes to the approach taken by what is in effect a new management team. The analysts therefore believe it appropriate to monitor the strategy to see how it and the new team evolve in future rather than support it with a rating at this point. (Decision as at 31.05.23)