Rating upgraded
TwentyFour Corporate Bond fund upgraded from A to AA Rating
Square Mile has upgraded the TwentyFour Corporate Bond fund from a single A rating into an AA rating. It continues to deliver attractive risk-return characteristics thanks to its focus on capital preservation and mitigating volatility. The analysts like the active, high conviction approach employed by the managers, who are supported by the ample and well-regarded team at TwentyFour Asset Management, a specialist fixed income boutique. (Decision as at 24.11.21)
Rating reintroduced
Allianz Strategic Bond fund awarded A Rating
Square Mile’s research team has reinstated of the Allianz Strategic Bond fund into the Academy of Funds with an A rating. The fund’s co-manager left the firm earlier this year, but the analysts’ conviction in the team remains intact following lead manager Mike Riddell’s swift strengthening of the team through three senior hires including the new deputy co-portfolio managers on this fund, Ravin Seeneevassen and Joe Pak. Having met with these new additions, the analysts believe they are well-suited to the fund, bringing a wealth of experience managing global macro strategies and trading derivatives in rates and inflation markets. Despite disappointing performance over the year to date, the fund maintains its core fixed income attribute of providing close to zero correlation to equities which remains a distinctive and attractive feature. (Decision as at 29.11.21)
Rating retained
FTF Franklin UK Equity Income fund retains rating
Following the news that oversight for Franklin Templeton’s UK equities team, headed by Colin Morton, is moving to the Martin Currie platform, Square Mile confirms it maintains the A rating on the FTF Franklin UK Equity Income fund, which Mr Morton manages. Square Mile sees this change as operational in nature and believes that the manner in which the team manages money will not impacted. Therefore, the analysts retain conviction in Mr Morton and the strategy. (Decision as at 04.11.21)
Ratings retained/removed
Columbia Threadneedle Investments acquire BMO’s EMEA Asset Management business
In April 2021, Ameriprise Financial Inc, owners of Columbia Threadneedle Investments (CTI) announced its intention to acquire BMO’s EMEA asset management business. On 8th November 2021, this acquisition completed, meaning BMO’s EMEA business and its subsidiaries, including Pyrford International, are now part of CTI. Following this completion, the ratings awarded to the CTI or BMO strategies within the Academy remained in place, pending further monitoring as the integration of the two businesses progresses. (Decision as at 10.11.21)
Subsequent to this announcement, however, the analysts removed the ratings from the BMO Navigator Multi-Manager Range of funds as part of a broader review of the multi-asset sector. While the funds benefit from an experienced and well-regarded team, Square Mile’s analysts lack the necessary long-term conviction to maintain the ratings. There has been a trend to outflows across higher cost offerings more generally, and Square Mile’s value for money analysis alongside a review of the portfolio’s structure has contributed to a decision to remove the ratings. (Decision as at 17.11.21)
Rating removed
Baillie Gifford UK Equity Alpha fund loses rating
Square Mile has taken the difficult decision to remove the Baillie Gifford UK Equity Alpha fund’s rating on the news that its long-standing manager, Gerard Callahan, will retire in April 2022. Management of the strategy is currently transitioning to Milena Mileva, who will assume sole lead management responsibilities from the 1st of May, 2022. Although the research team acknowledges that Ms Mileva has a closely aligned investment approach to that of Mr Callahan and has built a highly promising track record over the limited time she has managed money, the analysts believe that there will be some nuances in the way the fund will be run in future. They would therefore prefer to see how these evolve over the coming months. Once the changes in manager and approach have had time to settle in, they will review the fund and the broader team. Square Mile notes Mr Callahan’s contribution to the industry and wishes him a long and happy retirement. (Decision as at 17.11.21)
