Square Mile Investment Consulting & Research (Square Mile) has added five new funds to its Academy of Funds. A-ratings have been awarded to:
• Fidelity Multi-Asset Income fund
• Newton Global Dynamic Bond fund
Positive Prospect (P+) ratings have been awarded to:
• BlackRock Global Multi-Asset Income fund
• Schroder Global Multi-Asset Income fund
• Aviva Investors Multi-Strategy Target Return fund
Square Mile's recommended funds, which sit within the Academy of Funds, carry a rating - A, AA, AAA, R or P+ - as reflection of the level of conviction Square Mile's team of analysts has in a fund's ability to deliver on expectations. Square Mile's independent, qualitative research is designed to offer advisers a solid foundation for client investment propositions and recommendations.
Commenting on the Fidelity Multi Asset Income fund, which receives an A-rating, Alex Farlow, Head of Risk Based Solutions Research, said:
"The fund has been designed and is managed by an impressive team which operates independently from the rest of Fidelity Worldwide Investment, but able to leverage off of the wider resources within the group. Fidelity Solutions Team has specifically designed a strong framework to ensure the fund meets its objective whilst allowing manager discretion on asset allocation and investment selection. The experienced lead manager has demonstrated his ability to meet objectives whilst managing investors' risk exposure.
We believe this is a robust offering and worthy of consideration for those requiring an attractive regular income stream but who are not prepared to take on a significant level of risk in order to achieve it."
On the BlackRock Global Multi Asset Income fund, which receives a P+ rating, Alex Farlow said:
"This is a solution for investors who require a high and regular level of income, along with a moderate level of capital growth over the longer term, all within a risk-controlled framework. The fund uses the full breadth and depth of the BlackRock group resources from asset allocation to global security selection. The Multi Asset Strategies group has been running a similar product successfully in the US since November 2011, achieving the stated objective. The scale of the business globally means that the product can be delivered almost entirely in-house, minimising costs.
The relatively short track-record of the fund, and indeed of global multi asset income strategies generally, means it has not been tested through a major market event. However, we believe that the fund can deliver the stated outcome for investors."
On the Schroder Global Multi-Asset Income fund, which has also attained a P+ rating, Alex Farlow said:
"We believe this is an attractive fund for investors who require a high level of monthly income with the potential for some capital growth over the longer term within a risk controlled framework. Mr Forest is an experienced investor, and he and Mr Cunningham benefit from the well-resourced multi asset team within Schroders. Moreover, the fund leverages the wider group’s considerable resources, drawing on Schroders' equity and fixed income managers who run sub-portfolios for the fund. The managers' job is to take the group's best ideas and combine them in the most appropriate fashion to meet the fund's clearly defined objectives.
The fund has a relatively short track-record which is typical of global multi asset income strategies. However, the managers have run a similar product for the global market since 2012 and over this period have comfortably delivered the target income within set risk parameter."
Jason Broomer, Square Mile's Head of Investment, said of the P+ rated Aviva Investors Multi-Strategy Target Return fund:
"This is a new strategy for Aviva and a complex one at that. Normally we would only consider a fund that has had its robustness tested over at least one market cycle. In this instance we are prepared to consider the fund much earlier largely because of the impetus that Aviva Investor's CEO, Euan Munro brings to the product.
Mr Munro joined Aviva Investors in 2014 having spent many years at Standard Life Investments where he was the key architect behind a similar multi-asset strategy which went on to be hugely successful. It is apparent to us that Mr Munro will ensure that this success is duplicated at Aviva Investors and this product receives the fullest input from the various investment teams within the organisation. The rapid increase in the strategy's assets evidences the importance that Aviva Investors places in this product."
Commenting on the A-rated Newton Global Dynamic Bond fund, Victoria Hasler, Square Mile's Head of Research said:
"This is a solid fixed income fund run by an experienced manager. The focus on risk, and in particular on downside risk, makes it an attractive proposition for investors who wish to gain access to various parts of global fixed income markets but who are mindful of the capital volatility of their investments. The fund allocates to four distinct parts of the fixed income markets (developed market government bonds, investment grade credit, sub-investment grade credit and emerging market sovereign bonds). These allocations can vary, but the combination of these assets over time should provide a good risk/return trade off as, historically, they have been affected by different economic and market factors and tend not to all move in tandem with each other.
The focus on downside risk, together with the income generated by the fixed income instruments in which the fund invests, means that this fund should fulfil both our capital preservation and income outcomes for investors."
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