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From the category archives: Ratings Roundup

Ratings Roundup

Investec Emerging Markets Equity fund removed from the Academy of Funds

We have decided to remove our A rating of the Investec Emerging Markets Equity fund. Since the launch of this fund in 2012, the manager has struggled to meet his performance objective. Whilst some funds may have certain style factors which can lead to them lagging the market at various points in the cycle, one of the attractions of this fund was that it has a process that considers a range of key factors designed to help deliver performance through the cycle. Unfortunately, this has not been the case and our conviction in the approach employed to deliver on the manager’s objective, has waned over time. The emerging markets equity universe is a dynamic and competitive space, with a number of experienced managers and proven investment processes. At present, we feel that there are more attractive strategies on offer.

Franklin UK Mid Cap fund removed from the Academy of Funds

After an extensive and successful career, this fund’s longstanding manager, Paul Spencer, will be retiring in September 2020. In preparation for his departure, he will be handing over the management of the Franklin UK Mid Cap fund to Richard Bullas on 30th June 2020. Mr Bullas is lead manager of the Franklin UK Smaller Companies fund and has worked as part of the Franklin UK Small and Mid Cap team since January 2000.

Following this announcement, we have decided to remove the fund’s A rating, as although we acknowledge Mr Bullas’ experience of running UK small cap strategies, we believe Mr Spencer to be integral to the fund’s rating. Once the changes in manager have had time to settle, we will revisit the fund and the broader team.

We would like to take this opportunity to recognise Mr Spencer’s contribution to the industry and wish him a long and happy retirement from September.

Comgest Growth Europe ex UK Awarded an A Rating

We are pleased to award the Comgest Growth Europe ex UK fund with an A Rating. This fund’s managers seek to invest in high quality companies that they believe have strong and sustainable growth prospects. We believe this is an attractive, long-term offering for investors seeking exposure to European equities.

Rating Change for Kames Ethical Cautious Managed

We are pleased to announce that we have reintroduced Kames Ethical Cautious Managed into the Academy of Funds with a Responsible A rating. The fund was suspended following a number of senior departures from the fixed income team in 2018. Since then, Kames have made a number of senior hires to replace those who left the team. Importantly, the fund’s well regarded fund managers, Audrey Ryan and Iain Buckle, continue to run the fund as they always have and we are now comfortable reinstating the fund's rating.

Responsible Ratings Change - Stewart Investors Asia Pacific Leaders, Asia Pacific Sustainability, Indian Subcontinent Sustainability and Worldwide Sustainability

We have decided to remove our suspension of the ratings of the following funds, after our update with David Gait, who co-manages these funds with other team members of the Sustainable Funds Group within Stewart Investors. Mr Gait is joint Managing Partner of the firm. Whilst we feel reassured that the recent team departures have been managed in an efficient manner, we would like to see a period of stability within the wider Stewart Investors group, such that it does not, for instance, have an impact on the quality of idea generation, which can happen on occasion when there are changes in portfolio management and/or research teams.   Stewart Investors Asia Pacific Leaders fund – Previously Responsible AAA Rating changed to Responsible AA Rating Stewart Investors Asia Pacific Sustainability fund – Previously Suspended Responsible AAA Rating changed to Responsible AA Rating Stewart Investors Indian Subcontinent Sustainability fund – Suspended Responsible AA Rating to Responsible AA Rat ...

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PIMCO Select UK Income & BNY Mellon Sustainable Global Dynamic Bond Introduced to the Academy of Funds

We are pleased to announce the reintroduction of the PIMCO Select UK Income fund to our Academy at an A rating. We have now met with the fund's new lead manager, Eve Tournier, and are confident that she will continue to run the fund in line with the sensible income focus that the fund's investors have become accustomed to. She is backed by the vast PIMCO resources as well as two experienced co-managers, Andrews Balls and Ketish Pothalingam on this fund.  We are also pleased to announce that we have awarded a Responsible Positive Prospect rating to the BNY Mellon Sustainable Global Dynamic Bond fund. Square Mile Responsible ratings are awarded to funds which include within their objectives or mandates an element that explicitly aims to have a positive impact on society and/or the environment, as well as to deliver on their stated financial objective. In our view, this fund meets this requirement. Launched in February 2019, this is the sister fund of the Square Mile AA rated Global Dynamic ...

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Cornelian acquired by Brooks Macdonald

Following the news today that Cornelian Asset Management is to be acquired by Brooks Macdonald Group, we have decided to retain our rating on the Cornelian Risk Managed range of funds. The transaction, we understand is dependent on the successful completion of a c.£30m equity placing by Brooks Macdonald as well as regulatory approvals. All being well the transaction is expected to complete in March 2020. We intend to monitor this situation carefully over the coming months and increase our interaction with Cornelian over this period.

M&G Property Portfolio removed from the Academy of Funds

We have taken the decision to remove the M&G Property Portfolio from the Academy of funds. The fund's performance has continued to be very poor this year, in large part because of its exposure to the retail sector. The combination of this, wider trends facing the sector and the UK property market in general has contributed to outflows from the fund and a cash balance that is needing to be actively managed. Although the fund's rating is currently suspended, we are now removing the fund from the Academy.

Rating Change for the Baillie Gifford Japanese Income Growth fund

We are delighted to announce that we have upgraded our rating of the Baillie Gifford Japanese Income Growth fund from a Positive Prospect to an A rating. We believe that this fund has plenty of features that make it a promising long-term strategy. Indeed, since its launch in 2016, the fund has consistently met its investment objectives in terms of capital and income growth. Moreover, since we introduced the fund into our Academy, our conviction in the managers has grown over time and they have constructed what we consider to be an attractive portfolio of high-quality growing companies with a yield orientation.

Rating Change for the LF Lindsell Train UK Equity fund

Following an extensive review of the LF Lindsell Train UK Equity fund, we have taken the difficult decision to downgrade the fund’s rating from AAA to A; an action we feel is appropriate because of our increasing concerns over the fund’s liquidity profile. Over the past few years, the fund has delivered strong performance both in absolute terms and versus its benchmark, the FTSE All Share index. This has undoubtedly led to the strategy attracting a large body of assets following an investment approach that results in a low turnover and highly concentrated portfolio. Given the current liquidity levels within the underlying stocks held, we believe there could be significant issues should the fund experience a prolonged period of and/or a sizeable level of redemptions. We would like to highlight that the fund has consistently met its performance objective and we retain conviction in the manager’s ability to continue to deliver this over the long term. However, given our concerns around the fund ...

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