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Morningstar Fund Ratings: Weekly Round-up

ANALYST RATINGS: This week, fund analysts reveal new ratings for T. Rowe Price, a upgrade for Fidelity and a downgrade for GAM

Morningstar Analysts 13 November, 2017 | 12:29PM

New Ratings

T. Rowe Price Emerging Markets BondBronze

Niels Faassen

Longtime manager Michael Conelius applies a time-tested process for an increasingly diversified universe. Conelius has latitude in allocating across emerging-markets debt sectors, including local-currency and corporate bonds, based on relative value and currency forecasts. Overall, the fund carries more credit risk than most rivals, particularly with its more recent focus on frontier-markets debt. The fund’s risk-adjusted performance--as measured by Sharpe ratio--beats both its category average and iShares JP Morgan $ Emerging Markets Bond ETF, which has a Morningstar Analyst Rating of Silver, during the trailing five years, suggesting that the fund’s risk-taking has paid off.

Upgrades

Fidelity Greater ChinaBronze

Germaine Share

We have strengthened our conviction in portfolio manager Raymond Ma, who has managed the fund since July 2012 and brings 17 years of experience to the table. He continues to impress us with his expertise in the consumer and IT sectors, and has steadily broadened his knowledge across the other sectors, which we feel is important in running this fund. We are also reassured to see that he has consistently used the bottom-up, growth-focused investment process to good effect, and have diversified the fund’s sources of alpha across a few sectors in recent years.

Downgrades

GAM Global DiversifiedNeutral

Peter Brunt

The long-standing manager of this fund, Andrew Green, is stepping back from its management at the end of the year. He will be replaced by Ali Miremadi and Kevin Kruczynski, who both joined GAM through its acquisition of THS in 2016. While Green will remain at the firm in a consultancy capacity, Miremadi and Kruczynski will use their own valuation-aware and fundamentally based investment approach, which was shaped by their time at THS.

The analysts who previously provided dedicated support to Green will no longer be focused on the strategy. This not only signifies a material change in key personnel but also in approach. Green was far more technically minded and deep value in nature. The limited visibility we have in the new team's ability to add value in the new setup has caused us to lower the fund's rating to Neutral.

Ratings moved to Under Review

M&G Global Leaders

Fatima Khizou

M&G has announced that Aled Smith has decided to step back from managing M&G Global Leaders in April 2018. A successor to this long-tenured manager has yet to be appointed by the group. Until then, the portfolio's day-to-day management will continue to be carried out by Smith with support from his current deputy manager Gautam Samarth.

Given the forthcoming change, we are placing the fund's Morningstar Analyst Rating under review. We will update and share our views on the fund once further information is released by the firm concerning how it is to be managed after April 2018.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article
Security NamePriceChange (%)Morningstar
Rating
Fidelity Greater China Y-Acc-USD24.42 USD0.23
GAM Global Diversified Instl GBP Acc20.39 GBP0.01
M&G Global Leaders GBP I Acc2,073.04 GBP0.74
T. Rowe Price Emerging Markets Bd Q USD12.52 USD0.08
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Morningstar Analysts   -