Insights

Veritas Asian awarded AA Rating

We are pleased to introduce the Veritas Asian fund into the Academy of Funds with a AA Rating. The fund is managed by Ezra Sun, a very seasoned investor in this space, who has gathered a small team of like-minded individuals with in-depth local knowledge of the region’s markets. This combination has helped them to navigate the region's evolving economies and growing universe of stocks; indeed, we believe the team's company research and stock selection is one of the best in the region and they have demonstrated this over the strategy's life and across a range of market episodes, with the majority of the fund's excess returns coming from stock selection. Mr Sun is seeking to deliver attractive risk-adjusted returns over the long term through a portfolio of quality companies that can benefit from long-term structural growth themes, and this we think should appeal to a range of investors looking for access to Asia's growth potential.

Baillie Gifford Positive Change awarded a Responsible A rating

We are delighted to announce that we have introduced the Baillie Gifford Positive Change fund to the Academy of Funds with a Responsible A rating.

Launched in January 2017, the fund's remit is a newer venture for Baillie Gifford, though we believe the firm has clearly put a lot of thought, effort and resources into this product. It has a well-defined and distinctive investment process for companies it seeks to invest in and places a strong emphasis on both returns and providing a positive impact over the long term. This fund deepens our Responsible ratings, and ultimately we believe it should not disappoint long-term investors who are seeking to invest in a manner that should be positive for the environment and society.

Update on the suspended rating of the L&G UK Property fund

L&G have today re-opened their UK Property fund for dealing. Dealing in the fund was suspended in March as a result of material uncertainty over the valuation of the portfolio in the wake of the Covid-19 lockdown. This was an issue that impacted the whole of the UK daily dealing, direct property fund sector and therefore all of the L&G fund's direct peers.

It is very welcome that L&G have been able to lift the suspension in dealing on their fund. In our view, the L&G property team has managed the fund well against some very challenging headwinds for the sector. The manager has understandably increased liquidity within the portfolio during the suspension period in order to accommodate any potential elevated levels of redemptions given the situation. However, for now, we have decided to maintain the suspension of our Recommended rating while we monitor the impact of resumed dealing on the fund's liquidity position and its portfolio.

Premier Liberation range of funds retains Recommended Rating

Following the recent announcement by Premier Miton that they have capped the OCF on the C Share Class of the Liberation range at 1.0% (effective 1st October 2020), we have decided to retain our Recommended rating for the range.

To facilitate this lower fee the funds will now hold some exposure to passive funds, having previously invested exclusively in active funds. Whilst we acknowledge that the alpha generation ability of the managers is reduced as a result of this change, we feel that there remains enough flexibility for the team to add value through both active asset allocation and the continued use of active managers where the team believe there is the greatest potential for alpha generation.

Embark Horizon Multi-Asset fund range Awarded a Recommended Rating

We are pleased to announce the introduction of the Embark Horizon Multi-Asset fund range into the Academy of Funds with a Recommended rating. This range consists of five multi-asset funds, each designed to map to specific EValue risk profiles.

Embark outsource management of the funds to the multi-asset team at Columbia Threadneedle Investments (CTI). We hold this team in high regard as they have shown a good ability over the years to add incremental value from asset allocation. The funds' invest into CTI's own funds and we believe that the group are one of only a small number of firms with appropriate strength and breadth to be able to support such an approach.

We believe that this fund range is an attractive option for investors requiring strategies that seek to provide capital growth over the long-term but who also want strategies designed to provide a more consistent risk profile.

Impending changes to the BlackRock GF European Special Situations and BlackRock European Dynamic funds

We have decided to retain our A Rating on the BlackRock GF European Special Situations fund. The fund's current manager, Mr Constantis, will be relinquishing his management responsibilities of this fund at the beginning of January 2021 to focus on his long/short strategy. From this point, the fund will be managed by Stefan Gries, an experienced investor in his own right, who is also the co-manager of the BlackRock European Absolute Alpha fund, which has an A rating in our Academy of funds. We believe Mr Gries, who is a fellow colleague of Mr Constantis, will run this fund just as capably and with a similar investment philosophy to the current manager; both are patient and invest with high conviction in what can be a relatively concentrated portfolio of growth companies. Harnessing the resources of Blackrock's large European investment team, Mr Gries also seeks to make investments in companies which have consistent records of value creation and strong free cash flow generation. As a result, our conviction ...

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Recent news from Schroder Fixed Income team

Schroders has announced that Andy Chorlton has been named as their new Head of Fixed Income, and after a decade, the previous incumbent, Philippe Lespinard, is stepping down from the role. This succession plan will take effect from 1st October and will be completed by the end of March 2021 upon Philippe's departure.

We believe the announcement does not meaningfully impact the investment process or teams of either of the Schroder fixed income funds in the Academy. We are therefore retaining our A ratings on both the Schroder Strategic Credit and the Schroder Sterling Corporate Bond funds.

Trium ESG Emissions Impact fund Awarded an A Rating

We are pleased to introduce the Trium ESG Emissions Impact Fund into the Academy of Funds with an A rating.

This is an absolute return equity long/short fund. Capitalising on the global drive to reduce greenhouse gas emissions and the regulatory enforcement of this trend, the manager makes long investments in companies which are undertaking measures to reduce their carbon footprints and environmental impact. At the same time, short investments are made in companies which have poor or deteriorating ESG characteristics. The fund is managed with very low net market exposure so returns, being driven principally by stock selection, should also continue to exhibit low correlation to stock market indices.

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