- Three new ratings awarded
- Two ratings downgraded
- Three ratings removed
Analysts at Square Mile Investment Consulting and Research (Square Mile) conducted 47 interviews with investment professionals from 30 asset management groups over the course of February 2022. Based on the intelligence gained at these meetings, and following reviews in the light of corporate announcements, the following actions have been taken.
New ratings
Waverton Sterling Bond fund awarded A Rating
Square Mile’s team of investment research analysts have admitted the Waverton Sterling Bond fund to the Square Mile Academy of Funds with an A rating. The team likes the high conviction approach employed by the managers and the core fixed income attributes delivered by the fund, in particular its low correlation to equities and high yield credit assets. They believe the fund offers a rare opportunity within the IA Strategic Bond sector, providing diversification from wider markets without sacrificing returns. (Decision as at 28.02.22)
Aegon Strategic Bond fund awarded a Positive Prospect rating
Square Mile has awarded a Positive Prospect rating to the Aegon Strategic Bond fund. The combined track record of the fund’s co-managers, Colin Finlayson and Alexander Pelteshki, began in December 2018 and since then, they have delivered impressive returns in a difficult market for fixed income assets. The analysts like the active, high conviction approach deployed in the fund alongside the impressive support of Aegon’s firm-wide fixed income resources.
The analysts note that, due to the managers’ greater willingness to make changes in the portfolio alongside the magnitude of these moves, the fund may have a higher risk profile than peers. They therefore believe it would be better suited for investors who have a medium to long-term investment time horizon. (Decision as at 09.02.22)
LF Morant Wright Nippon Yield fund awarded AA Rating
Square Mile’s analysts have awarded the LF Morant Wright Nippon Yield fund an AA rating. Morant Wright is a Japanese focused investment boutique, whose strategies are managed with a team-based approach, with a focus on undervalued companies with strong balance sheets and/or franchises. In addition, this fund invests in companies that pay a dividend, often at a premium to the market, that the managers deem to be sustainable and likely to grow.
Square Mile considers this fund to be suitable for investors that seek a broad exposure to Japanese equities, with a strict valuation discipline, but are also willing to accept higher volatility than the TOPIX index over shorter time periods. Nonetheless, over the longer term the analysts believe this strategy will reward investors with growth in capital and income. (Decision as at 02.02.22)
Rating downgraded
Artemis UK Special Situations fund: rating downgraded from AA to A
Square Mile’s analysts have reduced the rating on the Artemis UK Special Situations fund from AA to A. They emphasise that they continue to like the managers’ patience and pragmatism, two attributes which they believe are incredibly important. However, they feel an A rating better reflects their current level of conviction in the fund. (Decision as at 25.02.22)
TM Crux European Special Situations fund downgraded to A rating
Square Mile’s analysts have lowered the rating of the TM Crux European Special Situations fund from AA to A. The fund, run by portfolio managers Richard Pease and James Milne has faced challenges and although some of the reasons for its underperformance are explainable, there have been periods when returns have not been as consistent as the analysts would expect given the managers’ stock picking skills. They have therefore lowered the fund’s rating to A to better reflect their current level of conviction. (Decision as at 17.02.22)
Ratings removed
Liontrust Strategic Bond fund: A rating removed
On the announcement that David Roberts, co-manager of the Liontrust Strategic Bond fund, is retiring from the industry, Square Mile has decided to remove the fund’s A rating. Square Mile’s analysts have a high regard for the remaining managers, but they believe Mr Roberts’ departure to be a significant hit to the small team, particularly given the extensive skill-sets required to manage a strategic bond fund. (Decision as at 17.02.22)
TM CRUX European fund: AA rating removed
The European equity space is highly competitive, with a range of actively managed funds adopting a variety of investment approaches. Following a review of this sector, Square Mile’s analysts have decided to remove the TM Crux European fund’s AA rating. Over recent years, it has struggled to meet its performance aspirations, contributing to a fall in its assets. (Decision as at 17.02.22)
R&M UK Equity Income fund: AA rating removed
Following the news that Dan Hanbury, a founding member of River & Mercantile (R&M) Asset Management and long-standing fund manager, is to leave the firm, Square Mile has decided to withdraw the R&M UK Equity Income fund’s AA rating. Mr Hanbury’s involvement was a crucial aspect of the fund’s rating and his forthcoming departure has led to the decision to remove the fund from the Academy of Funds. (Decision as at 08.02.22)
