New Ratings
BlackRock Global Property Securities Equity Tracker – Silver
Kenneth Lamont
This fund provides very low-cost passive exposure to a market segment in which active funds have struggled to outperform their benchmarks. The FTSE EPRA/NAREIT Developed Index provides broad, cap-weighted exposure to REITs and listed real estate companies listed in developed countries globally. The fund has performed admirably, appearing in the top decile when ranked against its surviving category peers on a risk-adjusted basis over 3 and 5 years. With an ongoing charge of just 0.22%, the clean D share class of the fund is among the cheapest in the Morningstar Category.
Foord International – Neutral
Arthur Wu
The fund benefits from the presence of veteran manager Dave Foord, who founded Foord Asset Management in 1981 and remains an instrumental figure within the firm. The fund’s other co-portfolio manager, Brian Arcese, was appointed in January 2016 as the fund moved towards a multi-counsellor approach in which each manager takes responsibility for a sleeve of the portfolio. We see this as a sensible move to help alleviate the key man risk in its founder, Dave Foord. While the fund has generated a solid long-term track record, nearer-term performance has been predicated on incisive asset allocation decisions rather than bottom-up security selection and, ideally, we would like to see a more balanced performance contribution. In addition, we believe the investment process can benefit from more structure and more time is needed to assess the success of the multi-counsellor approach, which was only incepted in January 2016.
Downgrades
F&C MM Navigator Boutiques – Neutral
F&C MM Navigator Progressive – Neutral
Randal Goldsmith
Our conviction in these funds has been reduced by the high charges, which stand out as pricing across the market has been under downward pressure. We have a high regard for Gary Potter and Rob Burdett and their stable team. We also believe they are adept at uncovering new managers who are showing potential. They aim to add value from asset allocation decisions, but with the high equity weighting in these mandates, we believe this is difficult to achieve. With the fee drag then acting as a tough hurdle to generate future outperformance, the fund’s Morningstar Analyst Rating is therefore reduced to Bronze.
Henderson Horizon Pan European Equity – Bronze
Peter Brunt
Tim Stevenson has proved an astute stock-picker over the years and has shown skill in constructing a well-balanced portfolio. However, while we remain positive on his capabilities, we believe that the fund's pricing places it at a structural disadvantage. Not only is the ongoing charge of the fund's clean share class (i.e. with no distribution fee included) expensive when compared with the clean share classes of peers, there is an additional performance fee. As a result, the Morningstar Analyst Rating is lowered to Bronze, reflecting our lower level of conviction in the fund's ability to outperform over the long term.
Allianz German Equity – Neutral
Barbara Claus
Lead manager Matthias Born will leave Allianz Global Investors in September 2017. After his departure, Christoph Berger will take over the role and Thomas Orthen will become deputy manager. Berger is experienced as a fund manager and analyst, but the strategies of his prior mandates are not directly comparable to Allianz German Equity’s. While the overall approach of the fund remains the same, we need to see more evidence on how the new managers settle in.
