Downgrades
L&G All Stocks Index-Linked Gilt Index – Neutral
Jose Garcia-Zarate
Investors simply looking for a low-cost, expertly managed and tightly-tracking index fund to gain all-maturity exposure to the market of UK government inflation-protected bonds, can be confident that this fund fits the bill. Ultimately, however, we must conclude that the very high duration of the underlying market means that the lack of flexibility of a passive approach can prove a distinct disadvantage at times. The fund may do well relative to investment category peers – both passive and active – in isolated periods, but over the long term this is unlikely to translate into above-average returns. In the context of the Morningstar Analyst Rating framework, this befits a Neutral qualification.
Neptune Russia & Greater Russia – Neutral
Lena Tsymbaluk
While we acknowledge Robin Geffen’s experience in Russian equities, the heightened analyst team turnover at the firm and the fund’s risk profile has reduced our conviction in its ability to outperform. Within its Morningstar category, there are peers who have evolved their process to set limits on sector deviations as a way of mitigating against some of the risks in the Russian market, and this has not been a consideration here.
These limits have worked effectively at peers, making for a better investor experience, and hence this gives us pause. Overall, with the team undergoing changes and struggling to compensate investors for the extra risk being taken in an already risky market, our conviction in the fund’s ability to outperform has waned.
