The research firm’s “analyst rating” is forward-looking. On an annual basis, analysts review and if necessary re-rate the funds on a five-tier scale with three positive ratings of Gold, Silver, and Bronze, a Neutral rating, and a Negative rating.
The analyst rating differs from the firm’s backward-looking “star rating”, which assigns 1 to 5 stars based on a fund’s past risk- and load-adjusted returns versus category peers.
Analyst ratings for August
1. Aberdeen Glb Chinese Equity A2
Downgraded to Neutral from Bronze. We continue to like the tight-knit team of nine, and we hold head of Asia Pacific ex-Japan equities Flavia Cheong in high regard. However, we have growing concerns about the team’s strict quality definition and its effectiveness in the Chinese stock market. The focus on corporate governance and track record has left the team with a small subset of the investment universe, and it is struggling to find opportunities in an evolving market.
The team-based approach also raises concerns about accountability. Fund performance has severely deteriorated since 2012, and the fund charges a relatively expensive total expense ratio. Overall, we believe there are stronger options for Hong Kong and Chinese exposure elsewhere.
— Germaine Share, Senior Analyst, Manager Research
2. Fidelity Gl Infl Link Bd A-Acc-USD
Following the announcement that lead manager of the fund, Andy Weir, would be leaving Fidelity at the end of August 2016, the fund’s rating has been placed Under Review. It previously was rated Neutral. Co-manager Tim Foster, who was appointed after his predecessor’s departure in September 2015, will take over as lead manager. Additionally, Ian Fishwick will join him at the helm as co-manager. We will be meeting with Foster in due course to discuss his future plans for the fund and assess the changes made to the management team.
— Ashis Dash, Analyst, Manager Research
3. Fidelity Thailand A-USD
Coverage initiated with a Neutral rating. Portfolio Manager Gillian Kwek was appointed in June 2015 but is no stranger to Thai equities. She previously managed the strategy a decade ago also currently manages ASEAN and other single country funds in the region, making her well qualified here. The process in place mirrors that used in other vehicles she is responsible for – preferring reasonably priced companies with improving growth prospects and strong management teams.
The portfolio has a fairly tight risk-controlled framework around active positions at stock and sector levels. We like the focus on corporate governance in an emerging market such as Thailand. Kwek’s familiarity with the Thai and the fact she adopts a consistently applied process across all strategies she
manages means that we feel this is a solid way to gain access to this niche market.
— Mark Laidlaw, Senior Analyst, Manager Research
4. First State Asian Growth I Acc
Coverage initiated with a Silver rating. This strategy has been managed since the start of 2014 by Richard Jones. Jones has been a member of the First State Stewart Asia team since 2010. The team, led by Martin Lau, is potentially one of the strongest we cover in this space. Jones displayed the level of details and insights we’ve come to expect from the FSSA team and we particularly like the fact that he’s unafraid to admit past mistakes and lessons subsequently learned.
The process in play is centred on robust bottom-up, patient research that looks for the stock on the basis of perceived quality, their ability to deliver sustainable and predictable growth and management team who show an alignment with minority shareholders. The track record here is impressive, trailing returns are top quartile over the medium and long term up to the end of August 2016. A competitive appeal only adds to the overall appeal.
— Mark Laidlaw, Senior Analyst, Manager Research
5. Parvest Equity Best Sel Euro C C
Downgraded to Neutral from Bronze. The fund has experienced increased turnover within its management team and continued performance weakness over recent years, largely due to poor stock selection. This, combined with a fee structure that is less compelling relative to peers, has caused a loss in confidence in the fund.
— Peter Brunt, Senior Analyst, Manager Research
6. Parvest Equity Best Sel Europe C C
Downgraded to Neutral from Bronze. The fund has experienced increased turnover within its management team and continued performance weakness over recent years, largely due to poor stock selection. This, combined with a fee structure that is less compelling relative to peers, has caused a loss in confidence in the fund.
— Peter Brunt, Senior Analyst, Manager Research
7. Parvest Equity Europe Growth C C
Downgraded to Neutral from Bronze. The fund has experienced increased turnover within its management team and continued performance weakness over recent years, largely due to poor stock selection. This, combined with a fee structure that is less compelling relative to peers, has caused a loss in confidence in the fund.
— Peter Brunt, Senior Analyst, Manager Research
8. Schroder ISF Strategic Bd A Acc
Retains a Neutral rating. Following the departure of portfolio manager Gareth Isaac, co-manager Paul Grainger will continue in his role. He will be assisted by other members of Schroders’ multisector team, including head of global macro strategy and former lead manager, Bob Jolly. As this team was bolstered in recent years, Jolly moved his focus to global macro strategy, handing over his fund management responsibilities to Isaac and Grainger in early 2016. Although the team has been strengthened over the years, the departure of an experienced manager and the short tenure of the majority of the team members limit our conviction, which is currently reflected by its Neutral rating.
— Ashis Dash, Analyst, Manager Research
